Ms. McLaughlin then moved for an entry of default judgment. The district court issued an order to show cause why judgment should not be entered for Ms. McLaughlin and set a deadline for Ms. Vidal to respond. The deadline passed, and Ms. Vidal did not respond.
The McLaughlin Prenuptial Agreement
Paragraph 8 of the prenuptial agreement between Mr. McLaughlin and Ms. Vidal provided that:
(a) [E]ach of the parties hereby expressly waives any right in fact or law either may have under any federal or state law as a spouse to participate as a payee or beneficiary under the interests the other may have in any such plans including, but not limited to, the right either spouse may have to receive any benefit, in the form of a lump sum death benefit, joint or survivor annuity, or preretirement survivor annuity, pursuant to any state or federal law. . . .
(b) Notwithstanding the foregoing, in the event that either party shall hereafter expressly designate the other as a participant or beneficiary in any of the plans, that designation shall control. Specifically, the parties intend that existing beneficiary designation under the Legg Mason IRA shall survive this agreement.
The District Court’s Decision
The district court granted judgment in favor of Ms. McLaughlin, ruling that Mr. McLaughlin and Ms. Vidal’s divorce and settlement payment – which resulted in the enforcement of a prenuptial agreement and a settlement of $1 million – had revoked Ms. Vidal’s status as the beneficiary of the annuities.
In its decision, the district court reasoned that the prenuptial agreement between Mr. McLaughlin and Ms. Vidal provided “clear and convincing evidence” establishing that the parties had intended to terminate Ms. Vidal’s beneficiary status in the event of divorce. The district court pointed out that, when Mr. McLaughlin and Ms. Vidal divorced, the District of Columbia divorce court enforced the agreement and incorporated it into the divorce judgment, finding that it “serve[d] to resolve all issues between them incident to their marriage.”
The district court conceded that the waiver language in Paragraph 8(a) of the prenuptial agreement, taken alone, might not sufficiently establish an intent to terminate Ms. Vidal’s beneficiary status in the event of divorce given that it focused on rights arising “as a spouse,” which “call[ed] to mind rights created by default rules governing payee and beneficiary status, as opposed to express designations made by contract.”
However, the district court added, taken as a whole, Paragraph 8 “clearly” showed that the parties meant for their divorce to extinguish Ms. Vidal’s status as beneficiary of the annuities. By specifying that beneficiary designations made after execution of the prenuptial agreement should be honored notwithstanding the waiver, the “parties manifested their intent to vitiate beneficiary designations made before the agreement, like those of the annuities here.” Moreover, the district court said, that Ms. Vidal had been designated as beneficiary before the parties had executed their prenuptial agreement also was “independent proof that the parties had the annuities in mind when executing the agreement.” And the fact that the parties specifically identified the Legg Mason IRA as exempt from their waiver suggested that “they contemplated that other similar assets, including the annuities, would be subject to the waiver.”
Accordingly, the district court concluded, because Mr. McLaughlin had not designated a contingent beneficiary for the annuities, his estate was their sole beneficiary, and Hartford and Allianz had to disburse the death benefits to Ms. McLaughlin in her capacity as personal representative of the estate.
The case is McLaughlin v. Hartford Life & Annuity Ins. Co., No. 17-cv-500 (CRC) (D.D.C. Oct. 25, 2017).
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