Oops I Forgot To Change My Life Insurance Beneficiary
Last week, I wrote about setting an annual anniversary date to review your Property Settlement Agreement to make sure that you are in compliance and to make sure that you are not missing an important benefit. The U.S. Supreme Court highlighted the importance of that approach this week in its decision in Hillman v. Maretta issued on June 3, 2013.
In that case, Mr. Hillman worked for the Federal Government and received life insurance as a benefit of his employment. Mr. Hillman had named his wife as his beneficiary when he established the benefits through his employment. They subsequently divorced and Mr. Hillman remarried. However, Mr. Hillman never changed his life insurance beneficiary through his employment. Therefore, when he passed away, the ex-Mrs. Hillman (his first wife) received his life insurance benefits in accordance with the beneficiary designation and his current wife received nothing. The current wife then sued the ex-wife in Virginia State Court to recoup the money under a state cause of action that had been created for these scenarios. Ultimately, the issue ended up before the U.S. Supreme Court because the State law conflicted with the Federal law regarding who should get the money.
Not surprisingly, the U.S. Supreme Court determined that Federal law trumps State law and that the named beneficiary (the ex-wife) retains the benefits. They basically stated that Mr. Hillman had more than enough opportunity to change the benficiary during his lifetime if he had wanted to and that the divorce did not automatically terminate her as beneficiary of the Federal Group Life Insurance program. Had Mr. Hillman reviewed these things before his death, all of this litigation could have been avoided.
Taking the time to review your assets and liabilities, as well as benefits, after your divorce is well worth the effort in the long run to avoid costly mistakes such as Mr. Hillman’s. If you are unsure about where you stand, it is well worth the time to make an appointment with a legal professional to make sure that you are covered. Posted by Elizabeth A. Calandrillo, Esq.