Distribution of property following a divorce can be a confusing and contentious process. Even if the parties can agree to a distribution agreement, complications may arise months or even years later as the parties try to interpret the agreement's language.
A recent Florida Supreme Court case illustrates just how important it is for parties to be thorough in drafting a property distribution agreement. They also need to cross-check that agreement to make sure it is in alignment with assets such as pension and retirement funds, insurance policies and annuities.
Crawford v. Barker
The case centered on the divorce of a Florida couple named Manuel and Linda Crawford. They were married in 1984, and in 1993 Manuel opened a deferred compensation plan. He listed Linda as the beneficiary.
In 2005, Manuel filed for divorce. He and Linda went through mediation and came to an agreement on how to divide their marital property. The agreement provided that Manuel "shall retain retirement money with" the deferred compensation plan. However, he never removed Linda as the beneficiary.
A year later, Manuel died. Linda claimed that because she was the listed beneficiary, she should receive the death benefits payable under the deferred compensation policy. Manuel's daughter, who was the executor of his estate, argued that the proceeds should go to Manuel's estate since the divorce agreement made clear that the deferred compensation fund was Manuel's property
The court ultimately ruled that Linda was entitled to the plan's death benefits. It reasoned the property division agreement only applied to the retirement money Manuel would receive while he was alive, and if Manuel wanted to stop Linda from getting the death benefits, he should have named another beneficiary. He would have also been free to state in the property division agreement that he did not want Linda to receive the plan's death benefits.
This case illustrates the importance of careful planning before executing a property division agreement or any other divorce settlement. If you are planning a divorce, even one that is not contested, you would be wise to seek the assistance of an experienced family law attorney.