Is F.S. s. 732.703 susceptible to a constitutional challenge by a former spouse whose claim for benefits is denied?

AuthorEng, Donna L.
PositionFlorida Statutes - Cover story

It's a common scenario: A spouse takes out a life insurance policy during the marriage and designates the other spouse as the beneficiary. Subsequently, they divorce, and the spouse who purchased the policy neglects to change the beneficiary designation. Is the former spouse who is named as the beneficiary entitled to collect the proceeds to the policy after the death of the spouse who purchased the property? Based on F.S. [section] 732.703, the answer should be no. But, can a former spouse defeat application of the section by arguing that the section violates his or her constitutional right to freedom of contract, or that the section violates his or her vested rights as a beneficiary under the policy? As will be shown below, based on the Uniform Probate Code and the rulings of other states with similar revocation on death statutes, the answer to that question should also be no.

In 1976, Florida "created the Florida Uniform Probate Code Study Commission," and ultimately adopted portions of the Uniform Probate Code. (1) F.S. [section] 732.703 is loosely modeled on Uniform Probate Code [section] 2-804, which revokes the designation of a former spouse as a beneficiary to a contract. The Uniform Probate Code section provides in relevant part:

[section] 2-804. Revocation of Probate and Nonprobate Transfers by Divorce; No Revocation by Other Changes of Circumstances.

(b) [Revocation Upon Divorce.] Except as provided by the express terms of a governing instrument, a court order, or a contract relating to the division of the marital estate made between the divorced individuals before or after the marriage, divorce, or annulment, the divorce or annulment of a marriage:

(1) revokes any revocable

(A) disposition or appointment of property made by a divorced individual to his [or her] former spouse in a governing instrument and any disposition or appointment created by law or in a governing instrument to a relative of the divorced individual's former spouse.... (2)

F.S. [section] 732.703 became effective July 1, 2012. The purpose of F.S. [section] 732.703(2) and its counterpart in the context of wills, F.S. [section] 732.507(2), (3) is to prevent certain assets or accounts from passing at death to a former spouse if the decedent did not intend for them to inherit, subject to certain exceptions.4 In Carroll v. Israelson, 169 So. 3d 239, 243 (Fla. 4th DCA 2015), the Fourth District observed the purpose behind F.S. [section] 732.507:

It is an understatement to say that animosities arise in divorce proceedings which are inconsistent with wills executed when everything was rosy in the marriage. Divorce attorneys typically advise clients to revise their estate plans for the post-divorce world. However, with all the stress of divorce litigation, it is not uncommon for people to resist the idea of their own mortality and procrastinate their post-divorce estate planning. And then they die with a will in place that provides for the former spouse. Section 732.507(2), Florida Statutes (2012), protects divorced persons from their inattention to estate planning details.

F.S. [section] 732.703 provides in relevant part:

(2) A designation made by or on behalf of the decedent providing for the payment or transfer at death of an interest in an asset to or for the benefit of the decedent's former spouse is void as of the time the decedent's marriage was judicially dissolved or declared invalid by court order prior to the decedent's death, if the designation was made prior to the dissolution or court order. The decedent's interest in the asset shall pass as if the decedent's former spouse predeceased the decedent ...

(9) This section applies to all designations made by or on behalf of all decedents dying on or after July 1, 2012, regardless of when the designation was made." (5)

Since [section] 732.703 was first enacted in 2012, no Florida courts have addressed the constitutionality or validity of the section. However, the courts that have addressed [section] 732.507(2) have applied it with no issues as to its constitutionality or validity. (6)

Public Policy Behind U.P.C. [section] 2804 and Similar State Statutes

The U.S. Court of Appeals for the 10th Circuit has observed that [section] 2-804 of the Uniform Probate Code "derives from the recognition that when spouses are sufficiently unhappy with each other that they obtain a divorce, neither is likely to want to transfer his or her property to the survivor on death." (7) As a result, state legislatures that have enacted revocation upon divorce statutes have done so for policy reasons. As noted by the 10th Circuit, in enacting these statutes, state legislatures have exercised "the legislative judgment that when the transferor leaves unaltered a will or trust or insurance beneficiary designation in favor of an ex-spouse, this failure to designate substitute takers more likely than not represents inattention rather than intention." (8)

Courts in states with revocation upon divorce statutes that are similar to Florida's statute have observed that such statutes further the public policy of implementing an insured spouse's probable intent to provide for his or her new family or spouse in the wake of a divorce. (9)

Revocation Upon Divorce Statutes in Other States

At least 21 other states have either adopted U.P.C. [section] 2-804 or have adopted their own revocation upon divorce statutes. (10) With the exception of a line of cases following Whirlpool Corp. v. Ritter, 929 F.2d 1318, 1322-1323 (8th Cir. 1991), and Parsonese v. Midland Natl Ins. Co, 550 Pa. 423, 706 A.2d 814, 818-19 (Pa. 1998), courts have generally found that these statutes do not violate constitutionally protected rights. (11)

Moreover, even if courts have not specifically addressed the constitutionality of the statutes, courts routinely apply their revocation upon divorce statutes to void beneficiary designations made to former spouses. (12) Because there is no Florida caselaw discussing the constitutionality of F.S. [section] 732.703, a review of caselaw from other states may provide guidance for Florida practitioners.

Whether Retroactive Application of F.S. [section] 732.703 Is Unconstitutional

Since the constitutionality of F.S. [section] 732.703 has not yet been addressed, a former spouse seeking to enforce the policy's beneficiary designations may argue that the section is unconstitutional because the statute impairs his or her rights to freedom of contract under the United States and Florida constitutions, and his or her vested rights as a beneficiary under the terms of the contract. In support, the former spouse may cite Parsonese and Whirlpool. (13)

In Parsonese, Midland National Insurance Company issued a life insurance policy to Francis J. Meyers, Jr. (14) Meyers originally designated two of his children as primary beneficiaries. Upon his marriage to Parsonese, Meyers changed the beneficiary designations so that Parsonese was the primary beneficiary, and three of his children were the contingent beneficiaries. A short time after Meyers changed the beneficiary designations, the Pennsylvania Legislature amended its probate code, and enacted 20 Pa. C.S. [section] 6111.2:

[section] 6111.2 Effect of divorce on designation of beneficiaries

If a person domiciled in this Commonwealth at the time of his death is divorced from the bonds of matrimony after designating his spouse as beneficiary of a life insurance policy ... any designation in favor of his former spouse which was revocable by him after the divorce shall become ineffective for all purposes unless it appears from the wording of the designation or from either a court order or a written contract between the person and his spouse that the designation was intended to survive the divorce.... (15)

After Pennsylvania enacted Pa. C.S. [section] 6111.2, Meyers executed a will, leaving nothing to Parsonese, and divorced her. Meyers died less than one year later. (16) After considering cross motions for summary judgment filed by Parsonese and Meyers' children, the trial court ruled that Parsonese was entitled to the insurance proceeds because Pa. C.S. [section] 6111.2 was unconstitutional and should not be applied to her. (17) The Pennsylvania Supreme Court agreed and affirmed.

In support of her argument that the statute was unconstitutional, Parsonese argued, inter alia, that retroactive application of the statute would violate Pa. Const. art. I, [section] 17, which provides that "[n]o ... law impairing the obligation of contracts ... shall be passed," and U.S. Const. art. I, [section] 10, which provides that "[n]o [s]tate shall ... pass any [l]aw impairing the [o]bligation of [c]ontracts." (18) Parsonese also contended that Pennsylvania precedent provided that the contracts clauses of the Pennsylvania and U.S. constitutions protect contracts freely arrived at from subsequent legislative impairment or abridgement.

In affirming the trial court, the Pennsylvania Supreme Court reasoned, inter alia, that the statute operated as a substantial impairment of a contractual relationship because selection of the beneficiary is the entire point of a life insurance policy, and that divorce should not automatically lead to the conclusion that the insured intended to terminate the contractual benefits for the former spouse. (19) The court also determined that retroactive application of the statute to Parsonese would violate the federal and Pennsylvania contracts clauses. (20) However, instead of providing any substantive discussion as to why retroactive application of the statute would violate Parsonese's rights under the contracts clauses, the court simply reasoned that Pennsylvania rules of statutory construction permitted it to decline to apply the statute retroactively. (21)

In Whirlpool, James Ritter, an employee of Whirlpool, entered into a group life insurance plan with Aetna Life Insurance Company and designated his wife, Darlene, as the only beneficiary. (22) Two...

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