Hillman v. Maretta, 569 U.S. 483 (2013).
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Insured named his then wife as the beneficiary of a life insurance policy covered by the Federal Employees’ Group Life Insurance Act of 1954. Insured later divorced the beneficiary and remarried but he neglected to change the beneficiary of the policy. After his death, both his current wife and his former wife claimed the proceeds. His current wife claimed that the divorce acted to revoke Insured’s designation of his now ex-wife as a beneficiary under Virginia law. On the other hand, his former wife asserted that local law was preempted by federal law and thus the designation of her as the beneficiary remained effective. In addition, the former wife also claimed that the Virginia statute holding her liable for the proceeds even if preemption occurred was likewise preempted.
The Supreme Court of the United States agreed that the Virginia statute was pre-empted and that the ex-wife was entitled to the proceeds of the life insurance policy.
Moral: Upon divorce (or even while the divorce is pending), life insurance beneficiary designations need to updated to reflect the insured’s intent because policies governed by federal law will not get the benefit of state law which automatically voids a beneficiary designation in favor of an ex-spouse.