Kazel v. Kazel, 3 N.Y.3d 331 (2004)

A Qualified Domestic Relations Order (QDRO) awarding an interest in a pension plan does not automatically include preretirement death benefits; the intent to distribute such benefits must be explicitly stated.

Summary

This case clarifies that a QDRO granting a former spouse an interest in a pension plan does not automatically extend to preretirement death benefits. Robert and Sandra Kazel divorced, and a QDRO was issued dividing Robert’s pension. Robert died before retiring, and Sandra sought a share of the preretirement death benefits. The court held that because the QDRO only addressed retirement benefits and did not explicitly mention death benefits, Sandra was not entitled to them. The decision emphasizes the need for clear and specific language in QDROs to ensure the intended distribution of all types of benefits, including death benefits.

Facts

Robert and Sandra Kazel divorced after 28 years of marriage in 1991.
A QDRO was entered to divide Robert’s pension plan according to the equitable distribution formula established in Majauskas v. Majauskas.
The QDRO directed that Sandra receive a percentage of Robert’s monthly allowance upon his retirement, or at her option, the earliest date allowed under the plan or when Robert reached early retirement age.
Robert died in 2001 before reaching retirement age and never received pension payments.
Sandra sought to share in the preretirement death benefits payable under Robert’s pension plan with Robert’s widow.

Procedural History

The plan administrator denied Sandra a share of the death benefits because the QDRO only granted her an interest in Robert’s retirement annuity.
Sandra sought to modify the QDRO to include a share of the death benefits.
Supreme Court denied the motion, finding Sandra failed to prove the divorce decree intended to award her survivor benefits.
The Appellate Division affirmed, granting leave to appeal to the New York Court of Appeals.

Issue(s)

Whether a QDRO that awards a former spouse an interest in a pension plan automatically includes preretirement death benefits, even if the QDRO does not explicitly mention them.

Holding

No, because a QDRO must explicitly state the intent to distribute preretirement death benefits for a former spouse to be entitled to them. Reference to a pension plan or pension benefits will not be deemed to include death benefits.

Court’s Reasoning

The court emphasized that ERISA and the IRC treat pension benefits and death benefits as separate interests. The court cited McCoy v. Feinman, stating, “mere mention of Majauskas does not by itself establish the parties’ intent to allocate those benefits.” The court reasoned that a QDRO must clearly designate the former spouse as the surviving spouse for purposes of survivor benefits to overcome the rights of an actually surviving spouse. The QDRO must reflect the intent of the underlying divorce judgment. The court rejected the argument that the phrase “pension plan” in the divorce judgment encompassed both retirement annuities and survivor benefits, stating, “pension benefits and death benefits are two distinct matters.” The court held that silence in the divorce decree regarding death benefits cannot be interpreted as an intent to include them. The court highlighted that the QDRO accurately reflected the terms of the underlying decree. Since the underlying judgment did not explicitly distribute death benefits, the QDRO was correctly drafted. The absence of evidence that the death benefits were considered by the matrimonial court further supported the decision not to infer an intent to include them. The court concluded that the law requires a presumption that death benefits are not included unless expressly provided for.