The HR Legal News Blog

Beneficiary Designations Redux: Hall v. MetLife

Beneficiary Designation in an Employee Benefit Plan May Take Precedence Over a Designated Will Beneficiary

Here’s a perennial problem.  A participant designates a beneficiary for the proceeds of his employee benefit plan.  Life moves on and, a few years later, he decides that his worldly goods should go to a different person. But he never gets around to changing his beneficiary designation in accordance with the terms of the plan.   Even if there is a new will naming an entirely different beneficiary, the original beneficiary designation is likely to be enforced.

The latest case to illustrate this lesson is Hall v. Metropolitan Life Insurance Company, decided on May 8, 2014 by the United States Court of Appeals for the Eighth Circuit.  In 1991, Dennis Hall designated his son as the beneficiary of his employer-sponsored life insurance benefits.  Ten years later, Dennis married Jane Hall.  In November 2010, several months after having been diagnosed with cancer, Dennis filled out and signed a new beneficiary designation naming Jane Hall as the sole beneficiary of his life insurance benefits.  However, he never submitted the change of beneficiary designation to the plan.   In January 2011, Dennis suffered a medical emergency and was rushed to the Mayo Clinic.   The next day he executed a new will naming Jane Hall as the beneficiary of “any and all life insurance benefits.”  He died several hours later.

The Eighth Circuit affirmed MetLife’s decision to pay the life insurance proceeds to Dennis’s son in accordance with the terms of the beneficiary designation.  The Court emphasized that the plan expressly granted to MetLife the “discretionary authority to interpret the terms of the Plan and to determine eligibility for an entitlement to Plan benefits.”  Moreover, while the summary plan description was silent on the matter, the plan was unambiguous in directing plan participants to submit a request to change a beneficiary designation within 30 days of signature.  Jane argued that, under federal common law, there was sufficient evidence to support Dennis’s substantial compliance with the beneficiary designation procedures.   The Court held that even if this were the case, “the substantial compliance doctrine would not deprive the administrator of the power to require strict compliance with the terms of the plan.”

What’s the lesson here?  The only sure way to change a beneficiary designation is to follow the procedures established by the plan.