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How Does Federal Law Affect My Estate Plan?

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One of the more complicated aspects of estate planning is that while probate, or the process of transferring property upon a person’s death, is normally controlled by Wisconsin state law, most retirement plans are governed by federal law, specifically the Employee Retirement Security Act (ERISA). The ERISA “preempts” or overrides state law to the extent that there is a conflict between the two.

Can You Recover Pension Benefits from a Spouse You Killed?

A common estate planning consequence of the ERISA is that your will or trust does not necessarily control who is entitled to receive any benefits your retirement plan may owe you upon death. Typically, the administrator of your retirement plan will ask you to sign a beneficiary designation form. That designation, and not your estate plan, dictates who gets the applicable benefits.

This does not mean that state law can never play a role in the final disposition of your retirement plan. The U.S. Seventh Circuit Court of Appeals, which has federal appellate jurisdiction over Wisconsin, addressed a case earlier this year involving a purported conflict between the ERISA and what is commonly known as “slayer statutes.” These are state laws designed to prohibit someone from inheriting from a person whom they killed.

For example, Wisconsin’s slayer statute states the “unlawful and intentional killing” of an individual “revokes” any provision in their estate plan that “transfers or appoints property to the killer.” In simple terms, if you murder your spouse, you cannot then inherit under his or her will. The slayer statute does contain an exception if the deceased included language in a will expressly declaring the slayer statute inapplicable.

The Seventh Circuit’s case actually addressed the Illinois slayer statute, which contains similar language to the Wisconsin law regarding “unlawful and intentional killing” of the deceased. In this case, a woman suffering from mental illness killed her husband. An Illinois judge found that while the wife “intended to kill” her husband “without legal justification,” she was not guilty of the criminal act of first-degree murder “by reason of insanity.”

The husband had a retirement plan governed by the ERISA, which provided benefits to a surviving spouse, or in the alternative, to a child. The husband and wife here had a minor child. The child’s legal guardian argued that the wife could not collect pension benefits under the slayer statute. The wife countered that the ERISA preempted the slayer statute, and therefore she could still recover survivor benefits. The plan administrator asked a federal judge to decide which side was right.

The judge held that the ERISA did not preempt the slayer statute and the wife could not collect benefits from her husband’s retirement plan. The Seventh Circuit agreed with that decision. As the appellate court explained, slayer statutes “are an aspect of family law, a traditional area of state regulation,” and there was no evidence that Congress “intended ERISA to allow one spouse to recover benefits after intentionally killing the other spouse.” Furthermore, since there was no dispute that the wife here “intentionally and unjustifiably” killed her husband, the slayer statute-barred her recovery, even though she was not held criminally responsible for her actions.

Contact a Madison Estate Planning Lawyer Today

The estate lawyers of Krause Donovan Estate Law Partners, LLC practice law in the areas of Probate, Wills, Estate Planning, and Trusts. We assist clients in and around Madison, Wisconsin with all matters related to estate planning, trusts, and probate matters. Our dedicated attorneys will even make house calls if you are unable to come to our office.

To attend a free estate planning workshop or to receive our client planner to assess your estate planning mindset, contact our office by calling (608) 344-5491 or use our online contact form.

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