Background
University of Chicago physician Edward Lyon participated in two ERISA-governed retirement plans whose default payment form for married participants was a 50% joint-and-survivor annuity. His valid 1998 beneficiary designation divided his benefits between his wife, Valerie Lyon, and the Edward S. Lyon Trust. In 2014, Valerie appointed her son-in-law, Daniel Davies, as attorney-in-fact under a Wisconsin power of attorney.
Shortly before Edward died in December 2019, he submitted a form seeking to make trusts for his 36 grandchildren the primary beneficiaries. Davies signed the required spousal consent for Valerie, but her power of attorney did not expressly authorize him to waive her survivor-annuity rights. TIAA and the university rejected the attempted change, leaving the 1998 designation controlling. Edward’s children and trustees sued for benefits, breach of fiduciary duty, and negligence, but the district court granted summary judgment to the defendants.
The Court’s Holding
The Seventh Circuit affirmed. Wisconsin Statute § 244.41(1)(f), rather than the more general authority supplied by § 244.51(2)(i), governed because the attempted consent would waive Valerie’s right to a joint-and-survivor annuity under a retirement plan. Section 244.41(1)(f) requires the power of attorney to grant that authority expressly.
Valerie’s power of attorney authorized Davies to name or change beneficiaries for accounts in which she held that right, but it did not expressly authorize him to waive her survivor-annuity rights under Edward’s plans. The 2019 waiver therefore was invalid. The court did not decide whether a waiver properly executed by an authorized agent would independently satisfy ERISA’s spousal-consent requirements. It also declined to certify a question to the Wisconsin Supreme Court and affirmed summary judgment on the alternative fiduciary-duty and negligence claims.
Key Takeaways
- Under Wisconsin law, an agent needs express authority to waive a principal’s right to a joint-and-survivor annuity, including a retirement-plan survivor benefit.
- General authority to change beneficiaries does not itself authorize an agent to waive the principal’s spousal survivor-annuity rights.
- The plans’ default joint-and-survivor form remained in effect because the 1998 designation did not make a qualified election of a different payment form.
Why It Matters
The decision underscores that beneficiary planning involving ERISA retirement accounts must account for both federal spousal-consent protections and applicable state power-of-attorney law. Broad financial or beneficiary-designation language may be insufficient when an agent is expected to relinquish a spouse’s protected survivor benefit.
Plan participants and estate planners should ensure that any power of attorney intended to authorize such a waiver contains a specific, express grant addressing survivor-annuity rights. A deficient authorization may invalidate a beneficiary change even when the family’s intended disposition is otherwise clear.