B-244826, Dec 12, 1991

B-244826: Dec 12, 1991

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His spouse's claim for an alternate distribution based on California community property and probate law is denied since the disposition of the unpaid compensation of a federal employee is governed exclusively by federal statute and regulation. The employee's unpaid compensation is to be divided equally among the five named beneficiaries. Deceased - Unpaid Compensation: This decision is in response to an appeal by Ms. Lambert was an employee of the U.S. At which time he was due $22. Lambert's SF- 1152 is entitled to one-fifth of his unpaid compensation. That pursuant to California community property law one-half of the unpaid compensation is her property over which Mr. The disposition of unpaid compensation due an employee of the federal government is controlled by the provisions of 5 U.S.C.

B-244826, Dec 12, 1991

DIGEST: A federal employee designated 5 beneficiaries, including his spouse, to receive any unpaid compensation due him at the time of his death under 5 U.S.C. Sec. 5582 (1988). His spouse's claim for an alternate distribution based on California community property and probate law is denied since the disposition of the unpaid compensation of a federal employee is governed exclusively by federal statute and regulation. Entitlement to such unpaid compensation vests in the beneficiaries designated by the employee, notwithstanding any competing claims by those who claim entitlement on the basis of local laws or court orders. Hence, the employee's unpaid compensation is to be divided equally among the five named beneficiaries.

David H. Lambert, Deceased - Unpaid Compensation:

This decision is in response to an appeal by Ms. Susan I. Savonis of our Claims Group's denial /1/ of her claim for the total unpaid compensation due her late husband, David H. Lambert. For the reasons stated below, we affirm the Claims Group's decision to pay Mr. Lambert's unpaid compensation in equal shares to the five persons, including Ms. Savonis, whom he designated in writing as his beneficiaries.

Mr. Lambert was an employee of the U.S. Information Agency. On December 22, 1988, he executed a Standard Form 1152 (SF-1152) designating his third wife, Susan I. Savonis, and his four children as equal beneficiaries of his unpaid compensation. After retiring on July 2, 1990, Mr. Savonis died on August 17, 1990, at which time he was due $22,557 in unpaid compensation. Ms. Savonis claimed the entire amount under California community property and probate law.

Our Claims Group determined that Mr. Lambert's unpaid compensation should be distributed in accordance with 5 U.S.C. Sec. 5582 (1988), which controls the disposition of unpaid compensation due a federal employee, thus holding that each of the five persons designated on Mr. Lambert's SF- 1152 is entitled to one-fifth of his unpaid compensation. On appeal, Ms. Savonis argues that 5 U.S.C. Sec. 5582 does not preempt California law, and that pursuant to California community property law one-half of the unpaid compensation is her property over which Mr. Lambert had no power of disposition. Therefore, she now contends that she should receive 50 percent of the unpaid compensation outright, and the other 50 percent should be divided equally among the designated beneficiaries, herself included.

The disposition of unpaid compensation due an employee of the federal government is controlled by the provisions of 5 U.S.C. Sec. 5582, which states that money due a deceased employee at the time of his death should first be paid to the beneficiary or beneficiaries "designated by the employee in a writing received in the employing agency before his death." If there is no such written designation, the statute then provides an order of precedence under which certain individuals may be paid. Neither the statute nor the implementing regulations restrict an employee's power to change or revoke his beneficiary designation at any time. 5 U.S.C. Sec. 5582(a); 4 C.F.R. Part 33 (1990).

We have consistently held that, as a general rule, if a deceased federal employee has designated beneficiaries for unpaid compensation under 5 U.S.C. Sec. 5582, payment may not be authorized to a person other than those designated. See Chester F. Dean, B-227728, Mar. 23, 1988. We have also consistently held that the disposition of unpaid compensation or other amounts payable under federal law is governed by federal statute and regulation, and not by the laws and court orders of the states of domicile or other state jurisdictions. Chester F. Dean, B-227728, supra; Harold S. Fenner, 58 Comp.Gen. 644 (1979); 51 Comp.Gen.483 (1972). For example, in Chester F. Dean a state court, pursuant to a divorce proceeding, ordered that Mr. Dean not change the beneficiary for his life insurance policy and not assign or transfer any community property, including all earnings. However, Mr. Dean subsequently changed the beneficiary for unpaid compensation from his wife to his father. Citing to our previous cases as well as federal cases, we held that the disposition of unpaid compensation due a federal employee is governed exclusively by federal law, and thus the father, as Mr. Dean's designated beneficiary, was the proper recipient of the unpaid compensation.

In support of our decision in Chester F. Dean, we cited Ridgway v. Ridgway, 454 U.S. 46 (1981). In Ridgway, the Supreme Court held that an insured serviceman's beneficiary designation under a life insurance policy issued pursuant to the Serviceman's Group Life Insurance Act of 1965 (SGLIA) prevailed over a constructive trust imposed upon the policy proceeds by a state court divorce decree. The Court determined that federal law bestows an absolute right on the service member to designate the policy beneficiary that is personal to the member alone and "is not a shared asset subject to the interests of another, as is community property." Id. at 60. Similarly, an employee covered by 5 U.S.C. Sec. 5582 possesses the right to freely designate the beneficiary and to alter that choice at any time, consistent with the applicable regulations. Hence, entitlement to the unpaid compensation of a deceased federal employee vests in the beneficiary or beneficiaries currently designated under 5 U.S.C. Sec. 5582 at the time of the employee's death, notwithstanding any competing claims that may be presented by a surviving spouse or others not so designated who claim entitlement on the basis of local laws or court orders.

Accordingly, we sustain our Claims Groups denial of Ms. Savonis's claim. Each of Mr. Lambert's five designated beneficiaries is entitled to one- fifth of his unpaid compensation, notwithstanding Ms. Savonis's claim based on California community property laws.

/1/ Z-2867080, April 30, 1991.