A Cautionary Tale: Divorce, Death and Survivor Benefits

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Via Beckstead v. Office of Personnel Management, 2020-1884 (Fed. Cir. Jan. 7, 2021) (MSPB Docket No. DE-0831-20-0119-I-1):
The court affirmed the administrative judge’s affirmance of OPM’s final decision denying the petitioner former spouse survivor annuity benefits. The court found that the survivor annuity election made during the petitioner’s marriage with the decedent terminated upon their post-retirement divorce and, despite the decedent’s receiving notice as required by statute of the election rights and obligations, no valid election was made or valid court order was issued granting the petitioner a former spouse survivor annuity.
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Background: Mrs. Beckstead was married to Lynn Beckstead (“Mr. Beckstead”) on February 4, 1965.
In 1971, Mr. Beckstead became a federal employee covered under the Civil Service Retirement System.
In 2007, he applied for retirement and elected a survivor annuity for his spouse, Mrs. Beckstead. Each year after Mr. Beckstead’s retirement, the Office of Personnel Management (“OPM”) sent him an Annual Notice of Survivor Annuity Election Rights (“Annual Notice”).
On December 3, 2009, Mr. and Mrs. Beckstead divorced. A state court in New Mexico issued a Default Decree of Dissolution of Marriage (“Divorce Decree”), which stated in relevant part that Mrs. Beckstead was entitled to:
Exactly one half (1/2) of any and all retirement benefits, 401(k) or other retirement account of [Lynn]. Such account(s) to be divided by Qualified Domestic Relations Order (QDRO). 
SAppx. 10. The Divorce Decree did not specifically provide for a survivor annuity, and no QDRO was issued while Mr. Beckstead was alive. Following the divorce, Mr. Beckstead did not notify OPM of the divorce and he never made a new election of a survivor annuity for Mrs. Beckstead.
Mr. Beckstead died on July 9, 2018, and Mrs. Beckstead applied for survivor annuity benefits thereafter. OPM informed Mrs. Beckstead that her application could not be processed because her Divorce Decree did not include the referenced QDRO.
On January 18, 2019, more than seven months after Mr. Beckstead’s death, the New Mexico state court issued a QDRO. SAppx. 24–26.
On March 19, 2019, OPM informed Mrs. Beckstead that she was not entitled to survivor annuity benefits because the QDRO was issued after Mr. Beckstead’s death. OPM then reconsidered and reversed its decision on the basis that the agency had failed to properly notify Mr. Beckstead of his rights to preserve the survivor annuity benefit after a divorce. SAppx. 32. Upon further review, however, OPM concluded that Mr. Beckstead had received notices informing him of his rights, but he did not elect a survivor annuity for Mrs. Beckstead after their divorce. Thus, on December 6, 2019, OPM confirmed its initial finding that Mrs. Beckstead was not entitled to former spouse survivor annuity benefits. SAppx. 35–36.
Read in full here (pdf).

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Must Read: Divorce and Foreign Service Retirement Benefits

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Via UNCLASSIFIED CABLE: 19 STATE 53266 Date/DTG: May 20, 2019 / 201659Z MAY 19 available via afsa.org:

1. Divorce can impact the division of Foreign Service retirement benefits. This message from the Bureau of Human Resources Office of Retirement outlines the key rules that apply under the Foreign Service Retirement and Disability System (FSRDS) and the Foreign Service Pension System (FSPS).

2. Please note that the guidance outlined in this message does not apply to Civil Service employees. The Office of Personnel Management (OPM) reviews and administers civil service court-ordered benefits. For more information, Civil Service employees should download Pamphlet RI 84-1 titled “Court Ordered Benefits for Former Spouses” from OPM’s website (https://www.opm.gov/retirement-services/publications-forms/pamphlets/ri84-1.pdf) or view OPM’s presentation on Court Ordered Benefits (https://www.youtube.com/watch?v=hZIaRfUtQB4).

Default Statutory Entitlement

3. The Foreign Service Act provides a statutory entitlement, also referred to as a default entitlement, when a former spouse is a qualified former spouse. A former spouse is a qualified former spouse if the following criteria are met: a) was married to a Foreign Service retirement plan participant for at least 10 years of his/her creditable federal service, b) at least 5 of those 10 years occurred while the participant was a member of the Foreign Service, and c) the former spouse must not have remarried prior to the commencement of any benefits and while under the age of 55 (age 60 for remarriages prior to November 8, 1984, for benefits under FSRDS). If the above criteria are met, and the former spouse is qualified, the statutory default entitlement applies regardless of the employee’s wishes, unless a spousal agreement or court order otherwise governs the disposition of benefits.

4. Under the default statutory entitlement, a qualified former spouse is entitled to a pro rata (marital) share of 50 percent of the employee’s annuity and a pro rata share of the maximum survivor benefit. The pro rata share is a fraction: the numerator is the total length of time of marriage during which the annuity was earned and the denominator is the retiree’s total creditable service. For example, if a couple was married for 14 years during the participant’s creditable service and the participant retired with 20 years of creditable service, then the pro rata share would be 14/20, or 70 percent. The former spouse would therefore receive 35 percent of the participant’s retired pay (which is half of the 70 percent pro rata share) while the participant would receive the remaining 65 percent.

Deviating From Statutory Entitlement

5. The Foreign Service default statutory entitlement may be altered through a valid court order or notarized spousal agreement. For example, a valid court order or spousal agreement can provide an express waiver of the former spouse’s statutory entitlement or provide that the former spouse’s entitlement be based on a different calculation method than the default calculation provided for by statute. Additionally, a valid court order or spousal agreement can award benefits even if the former spouse was not married to the retiree during his/her creditable Foreign Service or even if the marriage lasted fewer than 10 years. For a court order to be given effect for a former spouse, the order must be issued within two years of any divorce or annulment becoming final.

6. Any spousal agreement or court order that claims to alter or waive retirement benefits that are due under the Foreign Service Act to a former spouse must do so expressly in order for the alteration or waiver to be effective. To expressly waive or alter benefits under the Foreign Service Act, any spousal agreement or court order must specifically refer to Foreign Service retirement benefits. Merely mentioning generic retirement benefits or erroneously referring to retirement benefits under the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS) is insufficient to constitute a valid waiver or alteration of benefits. For example, to constitute an express waiver or alteration, the parties may specify that the relevant language in the agreement or order pertains to survivor annuities or pensions under the Foreign Service Act, under the Foreign Service Retirement and Disability System if the annuitant is a FSRDS participant, or under the Foreign Service Pension System if the annuitant is a FSPS participant.

7. In cases where the Department determines that a spousal agreement or court order language is insufficient, the parties may negotiate a new agreement or, in certain circumstances, return to court to correct the problem. A notarized spousal agreement may change the amount of the pension paid to the former spouse at any time. A court order can adjust the amount of a survivor annuity to a former spouse provided it is issued before the death of an employee/annuitant.

Submit Your Divorce Documents For Review

8. Foreign Service members must submit all relevant divorce documentation to the Bureau of Human Resources Office of Retirement (HR/RET) prior to retirement. HR/RET strongly encourages employees to do so prior to, or at the time of divorce, or no later than one year before retirement. In cases where years have passed since the divorce, it sometimes takes time to locate the former spouse. In other cases, state court orders may fail to meet federal standards or one party contends that the order has a different meaning than the Department’s interpretation. Thus, the parties sometimes must return to court to correct the problem. That process can take time.

9. To check in advance for such problems, Foreign Service employees should e-mail a certified copy of the entire court order and all attachments to the HR Service Center at HRSC@state.gov or e-mail that address asking for mailing instructions. HR/RET will review the documentation and provide the employee and their former spouse with a divorce determination letter addressing what, if any, retirement benefits a former spouse is entitled to.

Changes In Marital Status After Retirement

10. Foreign Service annuitants (retirees, their survivors, and former spouses) must report all changes in marital status (divorce, marriage/remarriage, or death of spouse) by notifying the HR Service Center and providing the relevant documentation.

11. Delays by annuitants in reporting a marriage/remarriage occurring after the participant’s retirement can permanently prevent a survivor election. A retiree who remarries after retirement has a limited period of time within which they may be eligible to make a survivor election for the new spouse. Under FSRDS, a retiree has only one year from the date of marriage/remarriage to elect a survivor annuity for a spouse acquired after retirement. For a FSPS retiree, there is a two-year deadline. When deciding whether to make a survivor election for a spouse acquired after retirement, it is important to consider that in order to remain eligible for FEHB benefits, a retiree’s surviving spouse must be eligible to receive a survivor annuity(whether or not the annuity would be payable in whole or in part to a former spouse).

For More Information

12. We understand this short message cannot address every conceivable situation. Therefore, additional questions may be sent to HRSC@state.gov.

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Difficult (And Sometimes Nasty) Divorce in the Foreign Service — AFSA Talk, July 30 at 2 pm

💔 By Domani Spero

As part of its Speaker Series, AFSA is presenting a panel discussion on divorce in the Foreign Service this week.  On Tuesday, July 30 at 2 pm, AFSA and the Department of State’s Divorce Working Group will present “a seminar and panel discussion on the sensitive yet important topic of divorce in the Foreign Service.”  The announcement says that this is “a great opportunity to become a resource on this issue for colleagues at your post or in your bureau who may go through such a life change; or in the event that this may affect you at some point.”

Expected to participate in the event are the following:  Susan Frost, the Director of the Family Liaison Office (FLO), will moderate the discussion; Panelists will include Daniel Hirsch, Management Officer and former AFSA Vice President for the Department of State; Work-Life Specialist Elizabeth Royal; Chief Policy Adviser of the Office of Retirement Jacqueline Long; and Sharon Zarozny, founder of Brilliant Exits LLC, a divorce consulting and support group.

Among the topics to be covered are what happens at post when a family splits up and what spouses’ rights are upon divorce. Handouts and resources will be available during the event and as always, the session will be recorded and made available for online viewing through our web site and YouTube channel.  This program takes place at AFSA HQ, 2101 E Street NW, at 2:00 pm on July 30. RSVPs are required for this event and should be sent to events@afsa.org.

About a year ago, the Director General of the Foreign Service Linda Thomas-Greenfield, then in office for barely a month sent out an ALDAC on Providing Adequately for Spouse, Partner, and Children Due to Separation and/or Impending Dissolution of Marriage or Domestic Partnership.  Below is an excerpt:

Marital separations, divorce, and the dissolution of domestic partnerships are difficult, emotionally trying times for Foreign Service employees and their families. The stress and logistical difficulties are exacerbated while an employee is posted abroad. It has come to my attention that some spouses, partners, and children depart post on Advance Travel Orders, when there is an impending dissolution of a marriage or domestic partnership, without the basic requirements to set up a home and sustain themselves. As a result, these families are put in the position of having to seek help from relatives and friends and, in some cases, from public assistance. The failure to adequately arrange for a spouse/partner or children’s transition from post can reflect adversely upon the U.S. government. Moreover, the COM and the Department have a legitimate concern in the welfare of family members accompanying employees to post and the overall morale at post. 

That this went out as an ALDAC probably means that there were more than one or two of these cases.  Read in full here.

Did you hear about that case from years back when a mid-level official left his family for another officer, decamped to a hotel and cause a minor scandal at post? Maybe the wife had no lawyer, or had a bad one, but we heard that she could not even afford to go to a fast food restaurant after she returned to the DC area!

What would you do if under a murky separation agreement, you  had to call ex-dear hubby every month to remind him to send money so the kids can eat? Do you know what to do if you’re asked to sign a quit claim to your spouse’s pension? Should you accept the house with a mortgage as part of a settlement? Is anyone at the State Department assigned a role as spouse’s advocate during this difficult and sometimes nasty process?  Spouses/partners with 52 weeks of creditable employment overseas get Executive Order Eligibility, what happens if you cannot find a job within the time limit prescribed under E.O. 12721?

All would be great questions for this panel on Tuesday. Below are some reading materials provided by AFSA:

Not a fun subject but …. something one might want to keep in the brain’s back pocket.

Blog Note — this blog is having a mental health break; nah, not a breakdown dears, just a much needed break.  Plus need to tear apart my whole bathroom (old house, long story).  So blogging may be on pause for the next couple of weeks.  Apologies, too for the slow mail from my end. Will get back to you as soon as I am able.

Mwaah! D/

😽