Tax Management Weekly Report, Vol. 32, No. 31, p. 1040, 2013
11 Pages Posted: 7 Aug 2013 Last revised: 26 Aug 2013
Date Written: August 5, 2013
The Supreme Court recently decided in Hillman v. Maretta, that state law and state equitable remedies may not be used to wrest benefits from the duly designated benefits under the Federal Employees Group Life Insurance Act (“FEGLIA”). The reasoning of the decision and the structure of the FEGLIA suggests that a state law ownership claim or associated state court order (other than one complying with plan terms), whether based on domestic relations law, property disposition on death law, contract law, constructive trust law, unjust enrichment, or other equitable principles, is preempted if it attempts to (1) compel a participant in an ERISA plan or in the Federal Thrift Savings plan to choose a beneficiary specified under state law, (2) punish the participant’s estate if the duly designated beneficiary was not such specified beneficiary; or (3) prevent a duly designated beneficiary from receiving or keeping the designated benefits. These conclusions are supported by the ringing endorsement of Hillman and its reasoning in the discussion of federalism principles within the Supreme Court’s majority opinion of U.S. v. Windsor.
Keywords: Pension, Life Insurance, ERISA, FEGLIA, preemption, equitable remedies, domestic relations, constructive trust
JEL Classification: G22, G23, H55, J12, J26, J32, J33, K12, K19, M52
Suggested Citation: Suggested Citation
Feuer, Albert, The Supreme Court Finds Federal Life Insurance Rules Preempt State Law in Hillman v. Maretta and Reinforces ERISA Protections for ERISA Plan Participants and Beneficiaries (August 5, 2013). Tax Management Weekly Report, Vol. 32, No. 31, p. 1040, 2013. Available at SSRN: https://ssrn.com/abstract=2306911