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Life Insurance Beneficiaries and Divorce

Guest post by Makeda Fikremariam

Commonly the Supreme Court doesn’t hear cases regarding domestic relations, but Sveen v. Melinchanged that pattern. Mark Sveen had been married to Kaye Melin for 10 years when they divorced in 2007. During their marriage, Sveen had made Melin his primary beneficiary on his life insurance. Also during that time, in 2002, Minnesota passed the Revocation-upon-divorce statute which automatically removes an ex-spouse from the insurance once the owner has passed. The complication arose because Sveen had passed in 2011, but his insurance was signed before the statute was in order and Melin was still listed. The argument became, does applying the statue after the contract was signed violate the Contract Clause?

 

This was passed to the Supreme Court as the lower courts disagreed on who should remain listed on the policy. The District Court sided in favor with the children, naming them the primary beneficiaries,while the 8th Circuit agreed with Melin. There’s a two step process in determining the constitutionality of this application. However, the Supreme Court felt that it didn’t violate the first step as the statute did not impair the pre-existing contractual goal and expectations. They also noted that the statute serves as a default, as the policyholder could submit a form to retain their ex-spouse. Justice Gorsuch, in his dissenting opinion, was against this point as he found that the law should redirect owners to ensure attentiveness in regards to their policy. He also noted that there are people who wish to keep their ex-spouses listed for a variety of reasons. For more information, please read Naomi Cahn’s piece in the George Washington’s Law Review: https://www.gwlr.org/sveen-v-melin/.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

New Tax Law Eliminates Alimony Deduction

For divorcing couples, alimony was a deduction that the payor could deduct from his/her taxes.  However, with the new tax bill, starting in 2019, alimony will no longer be deductible.

The result of this change may make spouses reluctant to pay, and will hurt those spouses who depended on the income of the wage earning spouse. Another side effect will be timing – one side may want to rush the divorce before 2019 and the other side may want to delay.

 

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Kids Staying in House After Separation or Divorce

I have heard of a few people already doing this.  I thought it was an interesting idea – the kids stay in the home, while the parents move in/out based on the custody arrangement.

I wonder if more families will start looking into this option. Interesting article from the New York Times.

 

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com