Background
Edward Lyon, a University of Chicago doctor, participated in ERISA-qualified retirement plans with a default benefit of a joint and survivor annuity for his spouse, Valerie. In 2019, Edward attempted to change the beneficiary designation to exclude Valerie and name trusts for their grandchildren. The plan required a notarized spousal waiver, which was signed by Valerie’s attorney-in-fact, Daniel Davies, under a power of attorney. The power of attorney granted general authority to change beneficiaries but did not expressly grant authority to waive survivor annuity rights. The University of Chicago and TIAA rejected the form, leading to litigation where the district court granted summary judgment for the defendants.
The court’s reasoning
The court analyzed Wisconsin’s Uniform Power of Attorney for Finances and Property Act, specifically Section two hundred forty-four point four one, subsection one, paragraph f. This section requires an express grant of authority for an agent to waive a principal’s right to be a beneficiary of a joint and survivor annuity. The court found that Valerie’s power of attorney contained only a general grant of authority, which was insufficient under this specific provision. The court rejected the argument that a general grant under Section two hundred forty-four point five one, subsection two, paragraph i, applied, noting that the specific statute controls over the general one. Because the spousal waiver was invalid under state law, the plaintiffs’ claim for benefits failed. The court also affirmed the dismissal of breach of fiduciary duty and negligence claims, holding that the recordkeeper’s actions were central to plan administration and thus preempted by ERISA.
What it means going forward
The decision clarifies that agents acting under powers of attorney in Wisconsin must have explicit, express authority to waive spousal survivor benefits in retirement plans. It reinforces the strict spousal consent requirements of ERISA and confirms that ERISA preempts state-law negligence claims against recordkeepers performing core administrative functions.