The Court of Appeals in Critchell v. Critchell addressed to what extent the federal law and regulation would impact the State contract law pertaining to prenuptial agreements.
In a dispute over distribution of husband’s pension fund, the trial judge in the case had ruled that the ERISA pre-empted the District of Columbia’s marital property law and ordered an equal distribution of the husband’s pension fund.
The Court of Appeals disagreed.
The prenuptial agreement between the parties had a clause specifically addressing retirement accounts in a broad language, specifically the clause stated:
- Each party shall, during his or her lifetime, keep and retain sole ownership, control and enjoyment of all property, real, personal or mixed, now owned or hereafter solely acquired by him or her, free and clear of any claim by the other, other than as provided herein. No property titled to either party separately shall be considered marital property.
ERISA (Employee Retirement Income Security Act), however, confers beneficiary status on a nonparticipant spouse under three circumstances. That is, the protections afforded to spouses of plan participants are found in these ERISA provisions:
- The qualified joint and qualified pre-retirement survivor annuity (survivor annuity); and
- The qualified domestic relations order (QDRO) proviso, which is exempt from ERISA’s anti-alienation provision, and
- The general pre-emption clause.
The Court of Appeals held that in the District of Columbia or other common law property states that have a statute either providing for the distribution of separate property or characterizing pensions as marital property, neither party would have a right to the other’s separate pension upon divorce and ERISA would not bestow such a right on the nonparticipating spouse.
In fact, it would indeed be an anomaly in the law to suggest that a federal statute pre-empts a state domestic law to mandate the recognition of a right that the statute itself does not create or afford.
Thus, the District of Columbia’s marital property law recognizes and effectuates the terms of a prenuptial agreement that the court has found to have been validly executed, as in this case.
Moreover, in the District of Columbia, prenuptial agreements are not necessarily void as against public policy, but courts are charged with scrutinizing such an agreement more carefully than other contracts to determine its fairness, whether it was entered voluntarily, and whether it was entered after full disclosure of financial assets by both parties.
In conclusion, because ERISA expressly defers to state law to determine if a former spouse has an interest in her spouse’s pension, and the District of Columbia recognizes prenuptial agreements as here with exclusionary language to be valid in a court of law, the wife had waived any claim to a property interest in the husband’s pension.
In short, interpretation of ERISA is subject to state domestic relations law only to the extent that a nonparticipating spouse earns a property interest in her/his spouse’s pension benefits, but not to the extent that state law allows the waiver of a right to a potential property interest upon divorce via a prenuptial agreement.