COA: Ex’s contempt order was valid but violated federal law

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A trial court’s contempt order against a man who named his current wife beneficiary of his military survivor benefits was valid, even though the court’s order that the ex-husband redesignate his ex-wife violated federal law, the Indiana Court of Appeals found Tuesday.

Russell and Angela McMaster divorced in 2011 after more than 20 years of marriage. Their divorce decree stipulated that Russell, who had retired from the U.S. Air Force, would designate Angela as a beneficiary of his survivor benefit plan. But after he remarried in 2012, Russell designated his current wife as beneficiary.

Angela didn’t learn of this until 2016, after which she filed a contempt of court motion against Russell. The trial court found him in contempt, ordered him to reinstate Angela as beneficiary, and ordered Russell to pay Angela’s attorney fees. After being denied a motion to correct error by the trial court, Russell appealed to the Indiana Court of Appeals, which reversed part of the trial court’s order that it found to be in violation of federal law.

“Concluding the trial court correctly determined that Russell violated the parties’ Marital Settlement Agreement, but constrained by the federal statutes which prevent the enforcement of the trial court’s order, we are compelled to reverse and remand in part and affirm in part,” Senior Judge Ezra Friedlander wrote for the panel Tuesday in Russell McCallister v. Angela McCallister, 49A02-1704-DR-887.

Under federal law, there are two ways an ex-spouse may be designated a beneficiary under survivor benefit plans. The veteran may elect his ex as beneficiary or the former spouse can file a written request that an election be deemed to have been made the designation. In both instances, the election must be made within one year of the court order directing the election.  

Because Russell named his current wife beneficiary more than a year after his divorce decree, Friedlander wrote, “It appears no Indiana case has addressed the precise question posed here: whether, at the present time, it is possible to designate Angela as the beneficiary of Russell’s SBP.”

The court turned to holdings in Florida and Georgia courts for guidance.

“Accordingly, we conclude that based on the facts of this case and the specific provisions of the SBP enacted by Congress, the trial court’s order directing Russell to reinstate Angela as the beneficiary of his SBP cannot be enforced despite Russell’s violation of the terms of the Agreement, Friedlander wrote. “Thus, because Russell failed to comply with the divorce decree and the SBP statutory deadline of one year for election of a former spouse as beneficiary and Angela did not request within one year that an election be deemed, Angela cannot now obtain beneficiary status with regard to Russell’s SBP.”

Nevertheless, the contempt order was valid, as was the trial court’s order that Russell pay $3,000 in Angela’s legal fees.

“(W)e conclude the action of reinstating Angela as beneficiary of Russell’s SBP as ordered by the trial court cannot be accomplished under the applicable federal law; therefore, we reverse and remand with instructions for the trial court to fashion an appropriate remedy to compensate Angela for the loss of her portion of Russell’s SBP,” Friedlander wrote.

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