After a couple divorces, estate law typically assumes that neither of the ex-spouses wants the other to receive any death benefits. If someone has left a lot of property in a will that was written prior to the divorce to that now ex-spouse, probate courts will constructively rewrite the will to exclude the ex-spouse. However, life insurance operates outside of the probate court system.
The default has always been that whoever is the policy beneficiary at the time of death, gets the benefits, even if it is an ex-spouse. Some states have written laws that say ex-spouses should be excluded. The Supreme Court recently ruled on such a state law, as SCOTUSblog discusses in “Court rejects a constitutional challenge to state law on life insurance policies.”
In the case, a Minnesota man took out a life insurance policy to benefit his then spouse and children. The couple divorced but the man did not change the policy beneficiary. Minnesota later passed a law removing ex-spouses from the policies.
The man passed away and the ex-spouse sued to get the benefits, on the grounds that the law was in violation of the Constitution’s contract clause. The Supreme Court disagreed and upheld the law.
There are, of course, cases, where someone might want an ex-spouse to receive benefits. For that reason, it is important to know the laws in your state, so you can make changes to your estate plan after a divorce or any other important life event.
Reference: SCOTUSblog (June 11, 2018) “Court rejects a constitutional challenge to state law on life insurance policies.”
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