Virginia case shows how divorce affects beneficiary designations
When a couple has been married for a long time, it can be difficult to separate every aspect of their lives. For this reason, a divorce can be complicated because it requires a number of issues to be resolved. In some cases, Virginia residents who forget to address certain issues following their divorce may find themselves facing disputes over assets or insurance settlements even years after a divorce is finalized.
The U.S. Supreme Court recently said it will hear a case dealing with a dispute over a deceased man's insurance benefits. The man was married when he died, but he had also been previously married to another woman whom he had divorced. Because the man had named the ex-wife as the beneficiary of his Federal Employees' Group Life Insurance Policy and had failed to change the beneficiary after he divorced and remarried, over $120,000 in insurance benefits was paid to the ex-wife.
His widow then sued the ex-wife to recover the money because Virginia law provides that beneficiary designations are revoked upon divorce. The issue remains unresolved because the insurance policy specifies that benefits are paid to the named beneficiary and states that the terms of the policy preempt state law, and the state courts hearing the case have disagreed as to the correct outcome.
When Virginia couples begin the process of filing for divorce, many of them cannot imagine how everything will unfold or what issues should be addressed. If a prenuptial or post-nuptial agreement exists, parties may need assistance in determining if the agreement is binding or enforcing its provisions. Determining how to divide investments and savings can be especially complex.
Unfortunately, the end of a marriage is usually not so simple that both former spouses can merely go their separate ways. There are legal means that can facilitate the separation, however. A clear, detailed divorce settlement that addresses all outstanding issues can not only make the process easier but also ensure that both parties can move forward as they hoped.
Source: Courthouse News Service, "Widow Can Fight Spouse's Ex Over Benefits Payout," Barbara Leonard, Jan. 14, 2013