What Happens When a Life Insurance Policy Designates an Ex-Spouse as the Beneficiary.

• Date: 29 October 2018
• Author: Gabay, Sari

* While married couples may create Last Will & Testaments and forget to change them following a divorce, numerous states have "revocation on divorce" statutes that typically treat a divorce as voiding a testamentary bequest to a former spouse. These revocation on divorce statutes were initially aimed at Last Wills & Testaments and rest on an assumption that the deceased presumably would not wish for an ex-spouse to inherit his or her assets and personal effects. Thus, if no action to change a Will is taken post-divorce, an ex-spouse generally will not inherit under the Will by operation of statute, at least in those states with such laws. But what if an ex-spouse is the designated beneficiary under a life insurance policy? Should a life insurance policy be treated the same as a Will with benefits automatically revoked on divorce?

At least 26 states, including New York, have adopted "revocation-on-divorce" laws so that beneficiary designations to former spouses are revoked upon divorce. Before considering New York law, it is relevant to understand a recent United States Supreme Court decision, Sveen v. Melin, 138 S.Ct. 1815 (2018), which involved an ex-wife's claim under Minnesota law to the death benefits under her ex-husband's life insurance policy.

Although Minnesota has a revocation on divorce law that provides that "the...