U.S. Supreme Court Upholds Minnesota Law Invalidating Ex-Wife as Beneficiary on Life Insurance Policy

U.S. Supreme Court Upholds Minnesota Law Invalidating Ex-Wife as Beneficiary on Life Insurance Policy

The Supreme Court of the United States (SCOTUS) recently upheld a Minnesota law that invalidated beneficiary designations to spouses after a divorce. The Court, in a 8-1 ruling, held the law did not violate the contracts clause when applied to a policy purchased before the law’s enactment. The case is Sveen v. Melin.

Beneficiary Revocation Post-Divorce

Minnesota is one of 26 states across the country that have adopted a “revocation on divorce” law. Essentially, these laws automatically revoke beneficiary designations to former spouses. These revocation laws are based on a 1990 amendment to the Uniform Probate Code, which was adopted on the presumption that failure to update beneficiary designations post-divorce and remove ex-spouses likely was the result of inattention and not intention. Under Minnesota law, an insurance policy holder or a court could override the revocation of the beneficiary.

 

Sveen v. Melin

There was no override of revocation in the case at hand. In Sveen, Mark Sveen had designated his Kaye Melin as the primary beneficiary of his life insurance policy and his two children from a prior marriage as the contingent beneficiaries. Upon Sveen’s passing, the children claimed they were the rightful beneficiaries of the insurance proceeds. Melin argued Minnesota law violated the contracts clause because the policy was purchased prior to the law’s enactment. The contracts clause prohibits states from passing laws that impair the obligation of contracts.

 

The Court’s Ruling

 The SCOTUS decision resolves a split of authority on the issue of whether or not a revocation law can apply to pre-existing beneficiary designations. The Court reasoned that the state law did not operate as a substantial impairment of a contractual relationship. According to the Court, the law was designed to reflect a policy holder’s intent; is unlikely to disturb a policy holder’s expectations because it does what a divorce court could have; and supples a default, which the policyholder can always change.

Experts believe this SCOTUS decision will likely affect the majority of states in the country.

Archive

Schedule Deposition

Newsletter

Name(Required)
This field is for validation purposes and should be left unchanged.

What Clients Say

Thank you so much.  I am so happy with your service.  Truly, I am a client for life.  You guys know what it means to make me feel special as a client, and not just a number.  Thank you so much.

R. Bexley

“Our firm has used Elizabeth Gallo Court Reporting on two occasions. I am extremely impressed with their level of professionalism and ability to get a deposition done for us in a VERY short period of time. They were very professional and most of all responsive to any inquiries I had. Joanie and Heather both left lasting impressions on me!”

L. Martin

“Thanks so much for your help. You are the best of all the firms we have used. Keep up the good work please!”

L. Johnson

“We are very happy with you guys and will continue to use you for all future depositions. Thank you again.”

K. Simpson

“My attorneys spoke very highly of your services. They definitely want to use your services. Good job.”

D. Gunnells