Surviving same-sex spouse entitled to death benefits

The same sex spouse of a plan participant was entitled to the death benefit provided under the plan following the participant’s death, according to a federal trial court in Pennsylvania. Applying the reasoning of the U.S. Supreme Court in United States v. Windsor, the court explained that, because the parties were legally married in Canada and that union was recognized as valid in their domicile state, the surviving partner was a spouse for purposes of the plan’s pre-retirement survivor annuity.

Plan entitled surviving “spouse” to death benefit

A participant in the profit-sharing plan of a law firm married her partner in Canada in 2006. The law firm was based in Pennsylvania, but the couple lived in Illinois.

The participant died in September 2010, without having designated a beneficiary to her plan benefits. Under such circumstances, the plan required that a death benefit in the form of qualified pre-retirement survivor annuity be paid to the participant’s surviving “spouse.” The participant’s spouse did not waive her right to the benefits. However the participant’s parents filed a claim for benefits. The law firm filed an interpleader action in federal court to resolve the competing claims.

Initially, the court noted that the plan defined a spouse as the “person to whom the participant has been married throughout the one-year period ending on the earlier of (1) the participant’s annuity starting date or (2) the date of the participant’s death.” The plan terms were to be construed and enforced according to the Internal Revenue Code, ERISA, and state law (to the extent not preempted by ERISA). Accordingly, ERISA and the Code, the court explained, supply meanings to plan terms not defined by the plan and the administrator is bound be these terms in making benefit determinations.

Defense of Marriage Act

The Defense of Marriage Act (DOMA) defined marriage, for purposes of all federal laws and regulations, as a “union of a man and a woman.” In addition, Sec. 3 of the Act limited the term “spouse” for purposes of federal laws and regulations, to “a person of the opposite sex who is a husband or wife.” DOMA, thus effectively restricted the references to spouses in ERISA and the Code to opposite sex spouses, thereby denying same-sex couples access to generally applicable spousal benefits.

The Supreme Court, in United States v. Windsor, changed the inequitable treatment of same-sex couples, ruling that Sec. 3 of DOMA, as applied to persons of the same sex who have been legally married under state law, was a violation of their right to equal protection under the 5th Amendment. Following Windsor, the trial court explained, the term “spouse” is no longer unconstitutionally restricted to members of the opposite sex, but now rightfully includes those same sex spouses in otherwise valid marriages. Post-Windsor, the court stressed “when a state recognizes a party as a “Surviving Spouse,” the federal government must do the same with respect to ERISA benefits…”

The court next acknowledged that Illinois does not issue marriage licenses to same sex couples. However, the court interpreted and applied the Illinois civil union statute as authorizing recognition of same-sex marriages solemnized in other jurisdictions (including Canada). Further, the court noted, an Illinois Probate Court recognized the validity of the marriage by declaring the surviving spouse the participant’s sole heir to a civil union. As the couple’s place of domicile recognized the marriage as valid, the court explained, the Constitution requires that federal law acknowledge the marriage. Accordingly, the participant’s surviving spouse was entitled to the plan’s death benefits.

Source: Cozen O’Connor P.C. v. Tobits (DC-PA).

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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