This is the April 20, 2009, issue of Elder Law FAX, a free newsletter published by the Elder Law Practice of Timothy L. Takacs.

Unmarried Domestic Partners Have "Marital Property Rights" in Pension Plan, Says Federal Appeals Court

For more than thirty years, Norma Owens and Phillip Owens lived together as husband and wife in King County, Washington. Although Norma and Phillip were never legally married, they had and raised two boys together, purchased a home together, and held themselves out to their friends and to the public as a married couple.

 

During their thirty-year relationship, Norma and Phillip also acquired numerous joint assets including real property, furniture, furnishings, and vehicles. The Owens' jointly acquired funds were held in various financial institutions, and some of these funds were held in joint bank accounts. Additionally, during their relationship, Phillip, because of his employment, acquired interest in various retirement accounts.

 

Phillip and Norma filed joint tax returns. The tax returns for 2003, 2002, and 2001 list Norma as Phillip's "wife." Norma was also named as Phillip's wife and beneficiary in Phillip's life insurance application.

 

In March 2004, Norma and Phillip separated. Only two major assets of theirs remained: the house in Seattle that they had purchased together and Phillip's ERISA pension plan with Automotive Trust. Proceeds from the sale of the house were used to pay off the Owens' delinquent mortgage payments and other debts. The only significant remaining asset was Phillip's ERISA pension plan with Automotive Trust. That ERISA pension plan is the subject of this litigation.

 

On August 10, 2004, shortly after the Owens' separated, Norma filed a "Petition for Equitable Distribution of Property Acquired During a Meretricious Relationship" in the Superior Court for King County, Washington. In the Petition, Norma claimed that she was entitled to fifty percent of each of Phillip's monthly pension benefit payments.

 

In January 2005, Phillip submitted his claim for early retirement benefits to Automotive Machinist Pension Trust. Phillip's claim became effective on February 1, 2005. Phillip currently receives gross monthly pension benefit payments from Automotive Trust in the amount of $1905.79; the payments will continue for his lifetime.

 

On May 11, 2005, the parties participated in an arbitration hearing. Automotive Trust was not a party to that action. On June 7, 2005, an arbitration award was issued in favor of Norma.

 

Norma presented the plan administrator with the state court order dividing the pension between her and Phillip, but the plan administrator refused to recognize the order as a qualified domestic relations order (QDRO) because the couple had never married and thus the order did not relate to "the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a participant" as required by ERISA (the federal pension law).

 

Norma sued the Automotive Trust in federal district court, which held in her favor. The Trust's appeal to the Ninth Federal Circuit Court of Appeals was unsuccessful. "We agree with the Washington Federal District Court that, because Norma and Phillip lived together in a quasi-marital relationship for more than thirty years, the Superior Court's Order does in fact relate to "marital property rights," that Norma is an "Alternate Payee" under 29 U.S.C. § 1056(d)(3)(B)(i)(I), and that the Superior Court's Order therefore qualifies as a valid Qualified Domestic Relations Order."

 

According to the appeals court, resolution of the dispute centered on the definition of "marital property rights." The State of Washington does not recognize common law marriage; however, it does recognize "quasi-marital relationships" for the purposes of property division for couples in "stable, cohabitating relationships."

 

It appeared to the Ninth Circuit judges that under Washington law, "quasi-marital property rights" is synonymous with "marital property rights"; therefore, Norma Owens was entitled to one-half of her "quasi-husband's" pension plan.

 

Owens v. Automotive Machinists Pension Trust, January 12, 2009.