In March, 2018, oral arguments were heard by the U.S. Supreme Court regarding the constitutionality of the Minnesota statute addressing the revocation of beneficiary designation upon divorce. The ultimate decision will affect the interpretation of the Florida statute (discussed in a prior blog) and the many clients who have relied on the statute.
In 2002, Minnesota amended its probate code to enact the revocation upon divorce statute… “the dissolution or annulment of a marriage revokes any revocable…beneficiary designation …made by an individual to the individual’s former spouse.”
The district court awarded the life insurance proceeds to Children rejecting Kaye’s argument that the statute was an impermissible impairment under the Contract Clause of the United States Constitution. The Minnesota statute was enacted AFTER Decedent signed the original beneficiary designation. Kaye appealed this decision.
The appellate court analyzed the Oklahoma case, Whirlpool Corp v. Ritter, which held that, automatically revoking an ex-spouse’s beneficiary designation signed before enactment of the Oklahoma statute (which was similar to the Minnesota statute), would violate the Contract Clause. The policy holder was “entitled to expect that his wishes regarding the insurance proceeds, as ascertained pursuant to this then existing law, would be effectuated. ” Thus, the Whirlpool court determined that the Oklahoma statute was unconstitutional when applied retroactively.
Following Whirlpool, the appellate court determined that the Minnesota statute impaired the policy holder’s contract, and thus, the statute was unconstitutional.
The U. S. Supreme Court granted certiorari and oral arguments were heard on March 19, 2018. A decision should be rendered in June.
ADVICE: Pay attention to the outcome of this case. The decision will have implications for all divorced individuals who have relied on the Florida statute to correct their beneficiary designation. Ideally, each policy holder should carefully consider their beneficiary designations after divorce and change the designations to reflect their desires. Unfortunately, the reality is that many individuals do not change their beneficiary designation after divorce. Generally, the policy of the Florida statute is that, in most cases, divorced individuals would not want their former spouse to remain the beneficiary.
Interestingly, several amicus briefs have been filed, including ACTEC, and the Women’s Law Project. The ACTEC brief supports the statute while the Women’s Law Project argues that the statute is unconsitutional and disproportionately affects women.
WORD OF THE WEEK: Certiorari is a writ (an order) of a higher court to a lower court to send all the documents in a case to the higher court so the higher court can review the lower court’s decision. Certiorari is necessary to appeal to the U.S. Supreme Court. The U.S. Supreme Court only grants review at its discretion and only when at least three members believe that the case involves a sufficiently significant federal question in the public interest. If the U.S. Supreme Court denies certiorari, then the appellate decision will stand.
GENEROSITY IS A KEY TO HAPPINESS…REACH OUT AND HELP SOMEONE TODAY! 😎