The Supreme Court held 3/21/01 that the Employee Retirement Income Security Act (ERISA) preempts a Washington probate statute that conflicts with ERISA’s requirements for plan administration. Washington’s statute provides that interests in non-probate assets -- including life insurance policies, employee benefit plans and annuities -- granted to a spouse are automatically revoked upon dissolution of the marriage. Two months after his divorce, Mr. Egelhoff was killed in a car accident. His children from a previous marriage sought recovery of the life insurance proceeds that had been paid to Mrs. Egelhoff as the named beneficiary. The Washington Supreme Court held that the state statute was not preempted by ERISA and thus operated to revoke Mrs. Egelhoff’s interest in the insurance proceeds at the time of the dissolution.
Reversing the Washington Supreme Court, the Court held that the state statute is expressly preempted by ERISA because it improperly requires plan administrations to pay benefits to beneficiaries chosen by state laws, rather than those identified in plan documents. The Court noted that the statute also interferes with nationally uniform plan administration. Justices Breyer and Stevens dissented arguing that the statute’s subject -- family property -- is an area of traditional state regulation and that the state statute posed no significant obstacle to ERISA’s enforcement.
The NAM filed two amicus briefs in this case, one urging the Court to hear the appeal, and the second on the merits. We were pleased with the outcome.