Divorce and Insurance: U.S. Supreme Court to Decide Who Gets the Money

Posted by Steven D. Eversole | Apr 22, 2013 | 0 Comments

Our Birmingham divorce lawyers know that there is always much to consider following the end of a long-term marriage.

Diamondring

One of those that must be weighed carefully is the distribution of assets, particularly when it comes to various insurance policies, joint accounts, and retirement funds. The hope is that by the time the divorce is finalized, there won't be any outstanding questions and you will be free to move on without any lingering doubt.

However, that doesn't always happen, and it can lead to bitter battles many years later.

That's what's happening in the case currently before the U.S. Supreme Court. Hillman v. Maretta involves a widow, an ex-wife and a man who died five years ago.

It started back in 1966 in Virginia. It may end in implications for divorcees in Alabama.

According to court documents, Warren Hillman married Judy Maretta. Back then, he was a federal employee, and he named his wife as the beneficiary on his group life insurance, which was held by the Federal Employees' Group Life Insurance Act.

Two years later, the pair decided to end their marriage.

Hillman remained divorced until 2002. At that time, he remarried. However, what he failed to do was update his life insurance policy to reflect that his new wife would be the beneficiary. Even though it had been 34 years since his marriage to Judy ended, she remained the beneficiary on his policy.

Just six years after his remarriage, Hillman passed away. Per the details of the policy, his ex-wife received approximately $125,000 in federal life insurance benefits.

The man's widow, however, felt this completely unfair – and she sued in civil court in Virginia under a state statute that revokes the right of a divorced spouse to life insurance benefits in favor of the widower or widow. The idea is that most people presumably want to have benefits channeled to their current spouse, rather than any ex-spouses.

(In a similar case out of Alabama, Brunson v. Harold, the appellate court ended up siding with the widow, rather than the ex-wife and her adult children.)

At its root, the Hillman case is about preemption. That is, does a federal statute preempt the state law in this regard. Specifically, U.S.C. 8705 holds that federal life insurance policies have to be paid out in order of precedence. At the top of that list is any beneficiary or beneficiaries named by the decedent. In this case, that would be the ex-wife. If the Supreme Court finds that federal law preempts the state law here, there is a likelihood the ex-wife would get to keep the money.

The widow is arguing that in this case, federal law wouldn't preempt state law because states for the most part are responsible for the oversight of domestic relations – specifically, family and divorce matters.

Initially, the county circuit court agreed with the widow. But that decision was later reversed by the state's supreme court, on the basis of preemption. Now, it's in the hands of the U.S. Supreme Court Justices.

The real blunder here was by the deceased spouse. His ex-wife should have been removed as beneficiary under his policy soon after the divorce. Had he done this, then under the order of precedence, his widow would be the next in line for the money. Again, this illustrates why having an experienced divorce attorney is so critical. You need to ensure that no aspect has been overlooked.

If you are contemplating a divorce in Birmingham, contact Birmingham Family Law Attorney Steven Eversole at (866) 831-5292.

Additional Resources:

Court: Does ex- or current wife get money? April 22, 2013, Alabama's 13, WVTM-TV

About the Author

Steven D. Eversole

J.D., Samford University's Cumberland School of Law, Birmingham, Alabama B.A., University of Alabama, Tuscaloosa, Alabama

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