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Are Slayer Statutes Preempted By ERISA?

No, a state slayer statute is not preempted by ERISA, according to the U.S. Court of Appeals for the Seventh Circuit.

What is a Slayer Statute?

A slayer statute is a state inheritance law that prevents someone who killed the decedent from inheriting from the decedent’s estate.  Every state has some form of a slayer statute.  Slayer statutes in many states are extended to include nonprobate transfers, such as life insurance death benefits and pay on death bank accounts.  For example, Florida’s slayer statute, found at Florida Statute Section 732.802 provides:

732.802 Killer not entitled to receive property or other benefits by reason of victim’s death.—

(1) A surviving person who unlawfully and intentionally kills or participates in procuring the death of the decedent is not entitled to any benefits under the will or under the Florida Probate Code, and the estate of the decedent passes as if the killer had predeceased the decedent. Property appointed by the will of the decedent to or for the benefit of the killer passes as if the killer had predeceased the decedent.
(2) Any joint tenant who unlawfully and intentionally kills another joint tenant thereby effects a severance of the interest of the decedent so that the share of the decedent passes as the decedent’s property and the killer has no rights by survivorship. This provision applies to joint tenancies with right of survivorship and tenancies by the entirety in real and personal property; joint and multiple-party accounts in banks, savings and loan associations, credit unions, and other institutions; and any other form of co-ownership with survivorship incidents.
(3) A named beneficiary of a bond, life insurance policy, or other contractual arrangement who unlawfully and intentionally kills the principal obligee or the person upon whose life the policy is issued is not entitled to any benefit under the bond, policy, or other contractual arrangement; and it becomes payable as though the killer had predeceased the decedent.
(4) Any other acquisition of property or interest by the killer, including a life estate in homestead property, shall be treated in accordance with the principles of this section.
(5) A final judgment of conviction of murder in any degree is conclusive for purposes of this section. In the absence of a conviction of murder in any degree, the court may determine by the greater weight of the evidence whether the killing was unlawful and intentional for purposes of this section.
(6) This section does not affect the rights of any person who, before rights under this section have been adjudicated, purchases from the killer for value and without notice property which the killer would have acquired except for this section, but the killer is liable for the amount of the proceeds or the value of the property. Any insurance company, bank, or other obligor making payment according to the terms of its policy or obligation is not liable by reason of this section unless prior to payment it has received at its home office or principal address written notice of a claim under this section.

California’s slayer statute is found at Section 250 of the California Probate Code:

(a) A person who feloniously and intentionally kills the decedent is not entitled to any of the following:

(1) Any property, interest, or benefit under a will of the decedent, or a trust created by or for the benefit of the decedent or in which the decedent has an interest, including any general or special power of appointment conferred by the will or trust on the killer and any nomination of the killer as executor, trustee, guardian, or conservator or custodian made by the will or trust.

(2) Any property of the decedent by intestate succession.

(3) Any of the decedent’s quasi-community property the killer would otherwise acquire under Section 101 or 102 upon the death of the decedent.

(4) Any property of the decedent under Division 5 (commencing with Section 5000).

(5) Any property of the decedent under Part 3 (commencing with Section 6500) of Division 6.

(b) In the cases covered by subdivision (a):

(1) The property interest or benefit referred to in paragraph (1) of subdivision (a) passes as if the killer had predeceased the decedent and Section 21110 does not apply.

(2) Any property interest or benefit referred to in paragraph (1) of subdivision (a) which passes under a power of appointment and by reason of the death of the decedent passes as if the killer had predeceased the decedent, and Section 673 does not apply.

(3) Any nomination in a will or trust of the killer as executor, trustee, guardian, conservator, or custodian which becomes effective as a result of the death of the decedent shall be interpreted as if the killer had predeceased the decedent.

What is ERISA and Why Does ERISA Matter?

The Employee Retirement Income Security Act of 1974, as amended (ERISA), is a comprehensive set of federal laws that governs employee benefits.  Most retirement plans and health insurance plans are governed by ERISA, and for large employers, virtually all tax deferred retirement plans and health insurance plans are covered.  ERISA preempts all state laws that purport to govern a covered employee benefit plan.  Whatever state law says, it will normally be disregarded with respect to any area governed by ERISA. In the areas of death and divorce, ERISA’s preemption can sometimes work injustice.

The Supreme Court weighed in on ERISA preemption in the case of Egelhoff v. Egelhoff (2001).  Many states have in their divorce law a provision that a divorce revokes any portion of a will or nonprobate device that would transfer assets to a former spouse upon death – the obvious reason being that people do not timely, if ever, update their wills or nonprobate designations to remove a former spouse.  In Egelhoff, the decedent had a life insurance policy at his place of employment governed by ERISA.  The decedent and his wife divorced, and the decedent died two months later, without having updated his life insurance beneficiary designation to remove his former spouse.

The Supreme Court in Egelhoff held that when the instrument of transfer is a beneficiary designation in a pension plan or life insurance policy subject to federal regulation under ERISA, the otherwise applicable state divorce revocation statute is preempted, even though ERISA makes no mention of divorce revocation. The Court reasoned that enforcing the state divorce revocation statute would “interfere with nationally uniform plan administration.”

Because the result in Egelhoff allowed supposed plan-level administrative convenience to defeat the principled objective of the divorce revocation statutes, a number of courts reacted by allowing so-called post-distribution relief, in some cases pursuant to a state statute so providing. Obeying Egelhoff, these courts preempted the state divorce revocation law at the plan level, thereby permitting the ex-spouse to receive the designated benefit from the plan, but allowing the person(s) entitled under the divorce revocation statute to recover those proceeds from the ex-spouse in a subsequent state-court action based on unjust enrichment. In a 2013 decision, Hillman v. Maretta, involving an insurance policy purchased under a program for federal employees, the Supreme Court extended preemption to forbid such post-distribution relief.

Yale law professor John Langbein has written the seminal article on Egelhoff and Hillman, in Destructive Federal Preemption of State Wealth Law In Beneficiary Designation Cases: Hillman Doubles Down on Egelhoff, Vanderbilt Law Review (2014).

ERISA Preemption Does Not Apply to Slayer Statute

Recently, the U.S. Court of Appeals for the Seventh Circuit in Laborers’ Pension Fund v. Miscevic, 880 F.3d 927 (7th Cir. 2018), held that the Illinois slayer statute is not preempted by ERISA.

In this case, a wife killed her husband. The husband was a participant in a union pension plan that provided survivor benefits to a surviving spouse or, if there were no surviving spouse, to a minor child.  The wife was found not guilty of killing her husband by reason of insanity. Her husband’s pension fund, brought an interpleader action to determine the proper beneficiary of the husband’s pension benefits because the couple had a minor child.

The wife claimed she was entitled to a surviving spouse pension. The child, through a guardian, claimed the wife was barred from recovering from the Fund by the Illinois slayer statute. The Illinois slayer statute provides that murderers are treated as having predeceased their victims so they cannot receive benefits as a result of their crime. The Seventh Circuit held the Illinois slayer statute not to be preempted by ERISA.

[The Egelhoff] Court concluded that the Washington statute “directly conflict[ed] with ERISA’s requirements that plans be administered, and benefits be paid, in accordance with plan documents,” and therefore, “impose[d] ‘precisely the burden that ERISA preemption was intended to avoid.'” Id. at 150 (quoting Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 10, 107 S. Ct. 2211, 96 L. Ed. 2d 1 (1987)).

[The wife] argues that the Court’s opinion in Egelhoff “compels a conclusion that [the Illinois slayer statute] is preempted.” She maintains that based on Egelhoff, “the only logical conclusion that may be drawn with respect to [the Illinois slayer statute] is that it is preempted pursuant to [ERISA] as a law that ‘relates to’ employee benefit plans.” We disagree.

Critically, the Court in Egelhoff commented that slayer statutes present a different question than the Washington statute at issue in that case. The Court acknowledged that, “[i]n the ERISA context, … ‘slayer’ statutes could revoke the beneficiary status of someone who murdered a plan participant.” Id. at 152. Nevertheless, the Court stressed “that the principle underlying the statutes—which have been adopted by nearly every State—is well established in the law and has a long historical pedigree predating ERISA.” Id. It opined that, “because the statutes are more or less uniform nationwide, their interference with the aims of ERISA is at least debatable.” Id. Eight years later, the Court again declined to address whether ERISA preempts state slayer laws. See Kennedy v. Plan Adm’r for DuPont Sav. & Inv. Plan, 555 U.S. 285, 304 n.14, 129 S. Ct. 865, 172 L. Ed. 2d 662 (2009).

Since Egelhoff, no federal court of appeals has faced the question of whether ERISA preempts state slayer statutes.

We agree with those [federal district courts] that have held that ERISA does not preempt slayer statutes. Slayer laws are an aspect of family law, a traditional area of state regulation. See Egelhoff, 532 U.S. at 152 (“[T]he principle underlying [slayer] statutes … is well established in the law.”); Manning v. Hayes, 212 F.3d 866, 872 (5th Cir. 2000) (noting that “the law of family relations,” including the “fairly uniform set of state laws” describing the slayer law principle, has “traditionally been a fairly sacrosanct enclave of state law”). Thus, to demonstrate preemption, [the wife] “bears ‘[a] considerable burden'” and must overcome the “starting presumption” that Congress did not intend to supplant this “traditional area of state regulation.” Biondi, 303 F.3d at 775 (quoting De Buono, 520 U.S. at 814); see also Egelhoff, 532 U.S. at 151 (“There is indeed a presumption against pre-emption in areas of traditional state regulation such as family law.”).

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