The Ohio Court of Appeals imposed a constructive trust over the proceeds of an ERISA governed life insurance policy for the benefit of the decedent’s children even though the children were not named beneficiaries of the policy. Crites v. Anthem Life Ins. Co., 2014-Ohio-1682 (Ohio Ct. App. 2014). Keith Crites, the decedent, had a life insurance policy through his employer with a death benefit of $30,000. His wife was the named beneficiary and his two children were the named contingent beneficiaries. Crites and his wife entered into a separation agreement (but not a qualified domestic relations order), which provided that Crites would maintain ownership of his employer-sponsored life insurance policy free and clear of any claims of his now ex-wife. Crites died without having removed his ex-wife as beneficiary of the life insurance policy. Crites’s ex-wife and two children each sought payment of the death benefit to them. The court held that Crites’s ex-wife, as the named beneficiary, must receive payment of the death benefit, but ordered that she hold the proceeds subject to a constructive trust in favor of the Crites’s children. While recognizing that ERISA requires that the plans be administered in accordance with the plan documents and that payments must be made to the named beneficiary, the court held that trial courts are empowered to impose constructive trusts on proceeds received from insurance policies governed by ERISA after the designated beneficiary receives the proceeds.
