The Supreme Court is looking at a Virginia law that would override a federal employee's designation of a beneficiary when it comes to federal insurance programs. The case is specific to a man with the initials W.H. and his ex-wife and surviving spouse from his second marriage. According to The Huffington Post, W.H. made his first wife, J.M., his beneficiary for his Federal Employees' Group Life Insurance policy before their divorce. Eventually, the couple's marriage faded, and they decided to separate.
Later, W.H. remarried another woman with the initials J.H. Unfortunately, W.H. never thought to chance his Federal Employees' Group Life Insurance policy beneficiary listing and J.M. remained the rightful recipient of this money. W.H. assumed that the policy would go to his current wife. Because of his he never saw the necessity of going through the paperwork for something so obvious.
When W.H. passed away, his life insurance policy went to J.M., his first wife. The current wife was furious, explaining that she was the rightful recipient of the life insurance policy because she was the surviving spouse. The Virginia Supreme Court looked at the case and determined that J.M. was able to keep the policy because her name was on the beneficiary form.
The Virginia law revokes a beneficiary designation in favor of the current spouse. Yet J.M. argued that there is a federal law which states that beneficiaries get the money. This conflict of laws led to a complicated battle which has gone all the way up to the Supreme Court. Justices are trying to decide whether Congress should be involved in a divorce matter, but they will most likely look at the case because of the conflict between federal and state laws that is implied.
This incident is a reminder to make sure that you update all documents and wills after a major change happens in your life. These changes may include a divorce, the death of your spouse, or a re-marriage. If you are not able to update your policy then your money will most likely be given to the individual listed as the beneficiary due to the federal law that mandates this practice. Other states may claim that the life insurance policy can be transferred to a current spouse, but as this case evidences, if the recipient chooses to challenge the case the court may defer to the federal laws.
The Federal Employees' Group Life Insurance policy covers over 4 million Federal employees and retirees and has a direct impact on their family members. This is a group term life insurance policy which means that it does not build up any cash value or paid-up value. Instead, the policy involves basic life insurance coverage and three forms of optional insurances. If you are a federal employee, this is only one of the benefits that you will want to carefully evaluate when you are estate planning.
Preparation is the key to a safe retirement and to leaving your children and spouse with the finances that they will need when you pass on. There are a variety of different exceptions that apply to federal employees, so you will need an attorney and other probate professionals to assist you. Don't attempt to estate plan without a professional on your side, as this can make things complicated. One mistake could create a serious discrepancy in the probate process. Be thorough and complete with all wills, policy designations, trusts, and other documents by hiring a lawyer that can help you today!