“Divorce, Dead Men, and ERISA” by James W. Cushing, Esquire
Last month Upon Further Review published an article I submitted called “Till Death Does Your Stuff Part” (which can be found here) regarding the latest development in the law regarding the interaction between divorce litigation, estate litigation, and the death of a litigant. I am now following up that article with the instant one because within a few days of publication, I received some pretty interesting and clever responses to the aforesaid article, and I would like to address them here as I think the issues they raise are food for attorneys’ thought.
One of the responses inquired about the application of the Dead Man’s Act to a divorce matter where one party dies after divorce grounds have been established. The Dead Man’s Act (42 Pa.C.S.A. § 5930) deals with the admissibility of evidence against a decedent by the parties to a contract in which the decedent was also a party. The Act serves to restrict the surviving members of a contract from presenting testimonial evidence against the decedent, also a member of the same contract, of anything that occurred before his death. The precise interpretation of the Act by the Court is complex, storied, and beyond the scope of this article. Suffice it to say here, however, that the Act does pose an interesting question vis-à-vis divorce. Generally speaking, Pennsylvania views marriage as a contract and if marriage is a contract, and one of the spouses (i.e.: parties to the marriage contract) dies, can the other party to that contract (i.e.: the surviving spouse) present any evidence against the decedent spouse under the Act? The cases in Pennsylvania on the subject are rather unclear, generally very old, and largely irrelevant as they do not account for the change in Pennsylvania law (i.e.: 23 Pa.C.S.A. § 3323(d.1) and 20 Pa.C.S.A. § 2106(a)(2)) as described in my previous article mentioned above. The cases, for the most part, involve a spouse trying to provide testimony regarding the other spouse in an attempt to elect against the decedent spouse’s estate. The cases regarding a surviving spouse’s testimony provided to attempt to elect against a decedent’s estate are nearly universal in their opinions that the testimony is inadmissible under the Act (or something similar thereto). Despite this, the cases also seem to tend toward allowing a surviving spouse to provide testimony as the existence of the marriage relationship. Under 23 Pa.C.S.A. § 3323(d.1) and 20 Pa.C.S.A. 2106(a)(2), if divorce grounds are established, the only avenue for the surviving spouse for a decedent’s spouse’s property is through equitable distribution, therefore there is a question as to whether these cases still apply.
At present, the cases do not shed light as to what sort of testimony will be permitted to be provided at an equitable distribution hearing involving a decedent spouse. A strict reading of the Dead Man’s Act would seem to imply that testimony regarding the decedent spouse by the surviving spouse is inadmissible; however, logically speaking, this seems to be obviously contrary to what would appear to be the intent of the legislature in passing 23 Pa.C.S.A. § 3323(d.1) and 20 Pa.C.S.A. § 2106(a)(2). Further, pursuant to 42 Pa.C.S.A. § 5927, in actions brought by one spouse against another to recover separate property, the testimony of one spouse is deemed “fully competent.” As above, how this interplays with the Dead Man’s Act and equitable distribution is not clear, but it would seem to lean toward allowing the surviving spouse to provide testimony.
In my opinion, I do not think it makes much sense to specifically take a divorce matter involving a decedent spouse out of estate litigation (where testimony is specifically prohibited by case law) and place it into equitable distribution only to have the testimony of the surviving spouse deemed inadmissible under the Dead Man’s Act; indeed, cui bono? It seems logical to me to discern from the legislature’s decision regarding the placement of a case into equitable distribution that it also intended testimony regarding the decedent spouse and the marriage contract by the surviving spouse to be admissible and, perhaps, to expand 42 Pa.C.D.A. § 5927 to cover all property at issue in a divorce. Otherwise, 23 Pa.C.S.A. § 3323(d.1) and 20 Pa.C.S.A. § 2106(a)(2) are simply exercises in academic futility. Please note that what I have provided above is simply my opinion; I do not know exactly how this will all pan out. It will be interesting to see how the Court resolves this seeming conflict between the 23 Pa.C.S.A. § 3323(d.1) and 20 Pa.C.S.A. § 2106(a)(2) and the Dead Man’s Act.
Before I move to the next issue, I would note that despite the 23 Pa.C.S.A. § 3323(d.1) and 20 Pa.C.S.A. § 2106(a)(2), the Dead Man’s Act appears to remain applicable regarding testimony by a surviving spouse about a decedent spouse and a Pre and/or Post Nuptial Agreement.
The next issue presented to me by the readers of Upon Further Review is the application of ERISA to 23 Pa.C.S.A. § 3323(d.1) and 20 Pa.C.S.A. § 2106(a)(2). This matter seems much more straight forward than the Dead Man’s Act. ERISA, as a Federal law, preempts Pennsylvania divorce law; there is no dispute about that. Under ERISA, once a spouse dies the terms of the insurance policy and/or pension become “locked in” as it were. Therefore, even if a party is in the midst of a divorce and the decedent spouse intended to remove the surviving spouse as a beneficiary of his/her pension and/or insurance policy but does not due to his/her death, the surviving spouse remains as beneficiary regardless of the intent. At this point, of course, the surviving spouse can attempt to receive whatever survivor’s benefits s/he may be entitled to receive. Therefore, the appropriate response by the estate of the decedent spouse is to file for an injunction against the surviving spouse to prevent him/her from receiving the benefits. It should be remembered that the estate of the decedent spouse takes the place of the decedent spouse in the divorce litigation if divorce grounds are established (if no grounds are established, the divorce litigation may no longer proceed regardless). The estate, as a result, may proceed through equitable distribution as if the decedent spouse were so doing. Consequently, through equitable distribution it would seem that the estate of the decedent spouse may still secure a Qualified Domestic Relations Order regarding the insurance policy and/or pension covered by ERISA.
The final issue raised to me was the application of Pennsylvania’s hearsay rules to equitable distribution hearings regarding a decedent spouse. Under Pa.R.E. 804(a)(4), death, perhaps obviously, is considered one of the ways a witness can be “unavailable” for testimony. Under this Rule, if a witness is unavailable, hearsay testimony of the statements made by the unavailable witness may be admissible under certain circumstances. Under Pa.R.E. 804(b)(3), a statement made by a decedent against his/her own interest may be admissible as evidence. Further, under Pa.R.E. 804(b)(4), the testimony of a dead (i.e.: unavailable) witness is admissible with regard to various issues of his/her own family history. Of course, the weight and credibility of this testimony is still to be weighed by the fact finder, but it seems that the mere death of one of the divorcing spouses is insufficient on its face for an objection based on hearsay to be sustained. However, it does seem that eliciting such testimony may be problematic; it will be interesting to see how the Court elects to rule in these sorts of cases.
I hope the above sheds some additional light on the application of 23 Pa.C.S.A. § 3323(d.1) and 20 Pa.C.S.A. § 2106(a)(2). I greatly appreciate those readers who took the time to contact me regarding these issues and I hope, through our mutual efforts, we can make the practice of Pennsylvania law clearer and more effective.