Beneficiary Designations Trump Settlement Agreements
Although decisions of the United States Supreme Court are not always relevant to Collaborative Law, mediation and domestic relations matters in New York, the Justices recently granted a unanimous decision in Hillman v. Maretta that affects divorce clients nationwide.
In a case involving a Virginia law and a Congressional statute about federal group life insurance, the Court issued an opinion that should be a wake-up call for ex-spouses everywhere. Once a marriage is dissolved, oftentimes follow-up financial details are forgotten or overlooked. In Hillman, the outcome was unfortunate for the subsequent/surviving spouse of the deceased: all of the federal life insurance proceeds were paid to the ex-wife since the husband never changed the beneficiary on his policy after their divorce.
While the case may be limited in scope to federal governmental plans, prior public- and private-sector cases in New York follow this same trend. Clients sometimes believe that once their Separation or Opting-Out Agreement is signed, nothing further needs to be done to implement the terms. Lo and behold, the Hillman law suit should be a timely reminder: thoroughly review all estate planning documents immediately after a divorce so your survivors do not encounter needless litigation and face the sad destiny of the present Mrs. Hillman.