Estate Can Sue Ex-Spouse to Recover Retirement Funds

In re Estate of Petronaci, Docket No. A-3842-21 (N.J. Super. App. Div. Jan. 10, 2024)

Brian Petronaci (“Decedent”) was married to defendant Laurie Voight (“Laurie”) from 2008 to 2015.  Section 9 of the couple’s Marital Settlement Agreement (“MSA”) stipulated that each party waived any interest in the other’s retirement benefits.  Section 2.2 of the MSA also stated that each spouse relinquished any interest in the other’s estate.

The Decedent died intestate on January 7, 2018.  At the time of the Decedent’s death, Laurie was still listed as the beneficiary of the Decedent’s 401(k) retirement account and received the account proceeds from the plan administrator.  Thereafter, the Decedent’s parents filed a complaint against Laurie to enforce the MSA’s waiver provision and to recover the retirement account proceeds, totaling approximately $116,000.00.

Laurie argued that ERISA preempted New Jersey law revoking disposition of assets to a divorcing spouse.  She also alleged that the waiver provision of the MSA did not apply to the couple’s 401(k) accounts.  Laurie also claimed that that the couple was in the process of reconciling at the time of the Decedent’s death and that he stated he had not removed her as beneficiary of his 401(k) because he wanted her to be the beneficiary.

The Appellate Division affirmed the trial court’s grant of summary judgment in favor of the Decedent’s parents.  It determined that the MSA’s waiver clause was clear and unambiguous and Laurie did not provide any evidence “within the four corners of the MSA” to support her contention that the Decedent’s 401(k) was not intended to apply to the waiver of rights of each other’s retirement plans.  The Appellate Division declined to look beyond the MSA’s plan meaning and consider extrinsic evidence in support of Laurie’s assertions.

The Appellate Division agreed that ERISA preempts New Jersey law; however, ERISA only governs the plan administrator’s duty to release funds to the designated beneficiary and does not bear on the validity of the MSA’s waiver provision.  The court relied on a Third Circuit decision, whereby an estate successfully sued an ex-wife of the decedent for proceeds the ex-wife received from the decedent’s ERISA plan (of which she was still the named beneficiary).  See Kensinger v. URL Pharma, Inc., 674 F.3d 131 (2012).  The Appellate Division relied on the Third Circuit’s determination that ERISA could not be relied on to bar an estate’s lawsuit to enforce a contractual right.

Accordingly, the Appellate Division affirmed the trial court’s decision that Laurie was required to return to the estate the proceeds she received from the Decedent’s 401(k) plan.