UNITED STATES SUPREME COURT UPHOLDS STATE STATUTE ON DEFAULT BENEFICIARY DESIGNATIONS IN THE CASE OF DIVORCE

• Tuesday, January 29, 2019
• Category: Wills, Trusts and Estate Litigation

In Sveen et al. v. Melin, the Supreme Court upheld the retroactive application of Minnesota’s statute on default beneficiary designation in the case of divorce. The case’s fact pattern emphasizes the importance of monitoring developments in state law and regularly updating estate planning documents and structures.

Sveen and Melin divorced in 2007, and Sveen died in 2011 having never updated the beneficiary designations on his life insurance policy. The Sveen children and Melin each claimed the proceeds: the Sveens argued that the 2002 statute removed Kaye as beneficiary; while Melin argued that the statute was unconstitutional under the Contracts Clause because it impaired the obligation of an existing contract. The federal district court found in favor of the Sveens, however, the U.S. Court of Appeals for the 8^th Circuit overturned and agreed with Melin that the law impaired the obligation of a contract in violation of the Contracts Clause.

The Supreme Court reversed the Court of Appeals in favor of the Svens, holding that Minnesota’s automatic revocation rule does not violate the Contracts Clause.

Reference: Tim Eagan, Philadelphia Estate Planning Council Newsletter, Vol. XXVIII, No. 1, Fall 2018, Page 17

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