In the case of Hillman v. Maretta, a husband had life insurance through his federal job and named his then wife as his beneficiary. When he divorced and later remarried, he failed to change the beneficiary of his policy. Upon his death, his ex-wife received his insurance proceeds, and then his widow sought to recover the insurance benefits from his ex-wife.
The case went before the Virginia Supreme Court, which ruled that federal law preempts the Virginia law, which created the widow’s cause of action against the ex-wife for the monies the ex-wife received from the policy because the insurance policy was issued through the Federal Employees Group Life Insurance Plan.
The Virginia court’s decision broke with the rulings from a majority of other state court decisions and the U.S. Supreme Court will now weigh in on the matter. “Until it does so, there will be an increasing amount of needless nationwide litigation regarding this unresolved issue causing unnecessary hardship to grieving families,” wrote Ruttenberg in the Petition for Appeal. The United States Supreme Court will most likely hear the case in April 2013.
This case is important because it highlights how complicated matters can become when people do not update their beneficiary designations, wills and other testamentary documents following a divorce. Ruttenberg says he has seen too many cases where a person has divorced, remarried and then died without changing their beneficiary designations to their children or new spouse, unintentionally leaving money, property, insurance policies, 401(k)s and other retirement accounts to their former spouses. “There is something very satisfying,” Ruttenberg told the Washington Business Journal, “that we will be helping a lot of people gain certainty. Win or lose in this case, there will be an answer, so people can properly plan.”
