Important Cases

IRAs After Divorce

The Importance of Changing Death Beneficiaries on Your Retirement Plan Accounts and IRAs after Divorce: The recent U.S. Third Circuit Court of Appeals federal court case of Estate of Kensinger v. URL Pharma, Inc. involved a lawsuit by a deceased person’s estate against an ERISA retirement plan administrator and the decedent's ex-wife who remained the named beneficiary of her ex-husband's 401(k) plan. The deceased ex-husband’s estate sought a declaration from the court that the estate was entitled to the funds in the ex-husband’s employer’s 401(k) plan account based on a waiver signed by the ex-wife as part of a divorce property settlement agreement. The appeals court ruled that the federal district court's grant of summary judgment in favor of the retirement plan was: 1) affirmed in part holding that the plan was required to distribute the funds to the ex-wife as the named beneficiary as that beneficiary designation was never changed after the divorce; but 2) reversed the federal district court judge’s ruling in part because the estate of the deceased ex-husband had the right to bring an action against the ex-wife to enforce her waiver and try to recover the disputed funds paid by the retirement plan to the ex-wife as the named beneficiary. Even though the outcome was favorable to the estate, it was not without significant cost. It is crucial to remember to change beneficiary designations for retirement plan accounts and life insurance after a divorce to avoid being involved in expensive litigation between the ex-spouse and the beneficiaries of the deceased ex-spouse’s estate or heirs at law.

College Expenses

The Supreme Court of New Jersey in 1982 ruled that in appropriate circumstances, the privilege of parenthood carries with it the duty to assure a necessary education for children.  Newburgh v. Arrigo, 88 N.J. 529, 543 (1982).  Courts have treated "necessary education" as a flexible concept that can vary in different circumstances. Id.  In general, financially capable parents should contribute to the higher education of children who are qualified students. Id. at 544.  In appropriate circumstances, parental responsibility includes the duty to assure children of a college and even postgraduate education. Id.  See also Ross v. Ross, 167 N.J. Super 441 (Ch. Div. 1979).

In Newburgh, the Supreme Court discussed the right to a contribution toward the cost of higher education from a non-custodial parent by evaluating the following factors:) Whether the parent, if still living with the child, would have contributed toward the costs of the requested higher education;

(2) The effect of the background, values and goals of the parent on the reasonableness of the expectation of the child for higher education;

(3) The amount of the contribution sought by the child for the cost of higher education;

(4) The ability of the parent to pay that cost;

(5) The relationship of the requested contribution to the kind of school or course of study sought by the child;

(6) The financial resources of both parents;

(7) The commitment to and aptitude of the child for the requested education;

(8) The financial resources of the child, including assets owned individually or held in custodianship or trust;

(9) The ability of the child to earn income during the school year or on vacation;

(10) The availability of financial aid in the form of college grants and loans;

(11) The child's relationship to the paying parent, including mutual affection and shared goals as well as responsiveness to parental advice and guidance; and

(12) The relationship of the education requested of any prior training and to the overall long-range goals of the child.

Newburgh at 545.