Spousal Beneficiaries and Divorce

Spousal Beneficiaries and Divorce

If like most people, you provide for your spouse in your will, then it is important to revisit your will should you get divorced. Estate law will offer you some protection, if you do not update your will.

In most cases, the ex-spouse will be constructively written out of a will that was executed before divorce. But that does not allow you to decide who gets any share that would have otherwise gone to your ex-spouse.

There are fewer protections for other instruments that might make up part of your overall estate plan, such as life insurance.

If your spouse is named as the beneficiary on your life insurance policy,  it will not change after you get divorced, unless you change your designations.

Some states have tried to make life insurance beneficiary designations work just like wills after a divorce and have passed laws that automatically revoke a spousal beneficiary upon divorce.

The Supreme Court will hear a challenge to those laws as SCOTUSblog reports in “Court adds seven new cases to docket.”

The issue before the Supreme Court in Sveen v. Melin is whether these state laws violate the contracts clause of the Constitution that prohibits the states from impairing contracts. The idea is that a life insurance policy could be part of a contractual relationship between spouses and that automatically revoking the designation upon divorce interferes with that contract.

Whatever the court decides,  it should be taken as a lesson. It is important to review your entire estate plan when you get divorced. Do not leave it up to state laws to fix.

Reference: SCOTUSblog (Dec. 8, 2017) “Court adds seven new cases to docket.”

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