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Federal Preemption in Divorce Cases
June 5, 2013
In a previous blog post, I discussed a United States Supreme Court case dealing with federal preemption of a state law which revokes a life insurance policy designation upon divorce. On Monday, SCOTUS issued its decision in Hillman v. Maretta, Case No. 11-1221. As expected, consistent with prior decisions on the subject, the court held that federal law preempts state law.
In the case, Warren Hillman had designated his then-wife, Judith Maretta, as beneficiary of his Federal Employees™ Group Life Insurance Act (FEGLIA). He did not change the beneficiary designation after their divorce. Virginia law (similar to Wisconsin law) provides that a divorce or annulment revokes a beneficiary designation for a first wife. This state statute conflicts with federal preemption law which provides that the beneficiary designation remains effective until affirmatively changed. So, when Warren died, his first wife, Judith, received the proceeds of the life insurance, instead of his widow.
SCOTUS, consistent with prior case law, held that federal preemption overrides state law. Therefore, Judith keeps the proceeds and wife #2 gets nothing.
The meaning of this case is simple: If you get divorced, change all beneficiaries immediately if you don’t want them in place. And if you are a divorce lawyer, make sure you tell your clients to do so. Good lawyers put this in writing as part of their post-trial letters.
As I said in my initial post, I tell my clients two things: First, immediately after the divorce, drive to your HR department to change all beneficiary designations for life insurance and retirement if your former wife was so named. Second, drive carefully on your way there.