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Life, Health & Disability Law
Untying the Knot: Revocation- Upon-Divorce Statutes Create Confusion for Life Insurance Companies, Policyholders, and
By C. Bailey King, Jr.
Revocation-upon-divorce statutes, which traditionally divested an ex-spouse named as a beneficiary in his or her former spouse’s will, have been extended by a growing number of states to also cover beneficiary designations for life insurance policies. Under these statutes, a majority of states now assume that a decedent would not want their former spouse to be the beneficiary of their life insurance policies, notwithstanding an executed beneficiary designation providing just that. Susan N. Gary, Applying Revocation-on-Divorce Statutes to Will Substitutes, 18 Quinnipiac Prob. L.J. 83, 84 and 103 (2004).
The policy behind revocation-upon-divorce statues may be sound, but applying them to life insurance beneficiary designations has left the state of the law in knots. In 2018, the United States Supreme Court held in Sveen v. Melin, 138 S. Ct. 1815 (2018) that the application of a revocation-upon-divorce statute to void a life insurance beneficiary designation made before the statute’s enactment did not violate the Contracts Clause of the United States Constitute. The fallout from this decision has created a landscape where determining whether a divorce revokes a beneficiary designation in favor of a former spouse can lead to complicated conflicts of law issues, an analysis of whether a particular statute applies prospectively only or retroactively to divorces finalized before the particular statute’s passage, and the application of statutes with different standards for determining what is required to overcome the presumption of revocation. These issues are frequently litigated, with different and often inconsistent results.
Currently, at least thirty-five states have revocation-upon-divorce. Despite the similarities among the participating states’ statutes, there are important differences. For example, some statues expressly exclude life insurance policies, while others do not; some statutes expressly provide that they apply only to designations made or divorces that occur after the statute’s enactment, while others do not; and some statutes allow extrinsic evidence to rebut the presumption of revocation, while others do not. In addition, where the statutes are silent on these issues, the inconsistent application and interpretation by the courts creates even greater uncertainty.
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Beneficiaries
C. Bailey King, Jr.
FDCC ANNUAL INSIGHTS 2023