Protecting Your Spouse from a Legal Battle with Your Ex-Spouse at Your Death

by Alison K. Noll

It happens more frequently than not – couples meet, fall in love, marry, have kids, then fall out of love and divorce.  An agreement is reached regarding custody of the children, child and spousal support, and the division of the couple’s assets and liabilities.  Everything from the bedroom furniture to the 401k and pension benefits is divided and in the end, each goes their separate way.  Some remarry, often finding themselves having to convince their new love that the ex-spouse is truly out of the picture and out of their life forever….or so they thought as you will see from some of the cases below.

While remarriage should always trigger an update of your existing estate plan, that doesn’t always happen.  In Virginia, under the “pretermitted spouse” rule1, if you signed a will before you married your new spouse, the law presumes that you did not intend to disinherit him or her.  The new spouse who was omitted from the will is entitled to take an intestate share of your estate2, but this is only applicable to assets passing through your will, which excludes assets with designated beneficiaries, unless your estate is the beneficiary.  In Maryland3 and Virginia4, a spouse is also entitled to receive a portion of your estate – the amount will depend on whether you have children.  However, your spouse has to proactively file a claim after your death for his or her “elective share” of your estate, which is costly, time consuming and guaranteed to create dissension among the kids and spouse.

If you die leaving behind a will that still provides for your ex, don’t worry, the issuance of a divorce decree essentially nullifies any provision of your will providing for your former spouse.  Sounds like you should be relatively okay even if you haven’t updated your plan, right?  Wrong.

The same is not necessarily true with respect to beneficiary designations under which you named your ex-spouse and never get around to updating.  Under Virginia law, a divorce automatically cancels a beneficiary designation in favor of a former spouse5 although a 2012 Virginia Supreme Court case has put that statute’s effect on federal benefits in serious question, as discussed below.   Maryland, however, has no similar statute so it is imperative to update your beneficiary designations to avoid your ex-spouse walking away with your estate at your death.

In a recent case, Maretta v. Hillman6, the Virginia Supreme Court ruled in favor of an ex-spouse who was still designated as the beneficiary of her former husband’s federal group life insurance.  In 1996 Warren Hillman designated his then-wife, Ms. Maretta, as the beneficiary of his federal group plan life insurance. The couple later divorced. Neither the divorce decree nor the Property Settlement Agreement required Warren to maintain Ms. Maretta as his life insurance beneficiary. Warren never changed his 1996 life insurance beneficiary designation, although he later remarried. Upon his subsequent death, Warren’s widow filed claims for life insurance benefits. However, consistent with the 1996 beneficiary designation, life insurance benefits were paid to Ms. Maretta.  Ms. Hillman filed suit against Ms. Maretta, alleging that under Virginia Code Section 20-111.1(D), Ms. Maretta was liable to her in an amount equal to the amount that Ms. Maretta received from Warren’s federal life insurance.

The Supreme Court of Virginia disagreed with Ms. Hillman and ruled in favor of the ex-spouse, Ms. Marretta. The court held that federal law, which allowed for a former spouse to receive benefits if the designated beneficiary, preempts Virginia Code Section 20-111.1(D)’s state-law action against an ex-spouse who is a designated beneficiary of federal group plan life insurance.  Ms. Hillman appealed to the U.S. Supreme Court.  On January 11, 2013, the U.S. Supreme Court agreed to hear the case.

When couples divorce, they enter into what is commonly known as a property settlement agreement or “PSA.”  The PSA covers not only the division of the couple’s property, but also support obligations of one spouse for the benefit of the other (i.e., alimony).  If there were children born or adopted into the family, the PSA will typically outline obligations regarding child support, who pays for college and frequently include a requirement that life insurance be purchased for the benefit of the children in the event the parent dies while the children are minors or before the children have all graduated from college.

The preparation of an estate plan for a couple should always take into consideration any obligations of the husband or wife to a former spouse.  I always ask estate planning clients for a copy of the PSA to review to ensure that any such obligations are fulfilled.  Picture this, husband dies and his new wife survives him and soon finds herself entangled in a legal battle with her husband’s ex-spouse over the $1M life insurance proceeds.  If the deceased husband did not fulfill his promise to leave life insurance for the benefit of his former spouse or the children of that marriage, the surviving spouse and/or the deceased spouse’s estate may be sued by the former spouse in an attempt to recover the insurance proceeds or an equivalent amount in other assets that she was entitled to under the PSA.  The deceased spouse’s promise that the ex-spouse was forever out of their lives turned out to be true for him, but not for his wife he left behind.

Even if you haven’t been divorced and especially if you marry or have a child, you should periodically examine and update all of your beneficiary designations for retirement plans, IRAs, 401K, annuities, life insurance, etc… In one case, husband died days after his baby was born.  He had never updated his federal group life insurance to include his spouse or his child.  All of his life insurance proceeds went to his nephews who he had named as beneficiaries several years ago, leaving his 4 day old daughter and wife with nothing but a huge mortgage on their home.

Updating your estate plan is easy enough to do, but is often delayed by simple procrastination.  The real effort is contacting your estate planning professional because once you have done that, he or she can take care of the rest for you by preparing new documents and completing beneficiary designations – all you need to do is sign.

1 Section 64.2-422 of the Code of Virginia (1950), as amended.

2 Spouse receives 100% of estate unless decedent has children from another relationship in which case spouse gets 1/3 of estate.

3 Md Code Ann., Est. & Trusts § 3-208.

4 See §64.2-300 et seq. of the Code of Virginia (1950), as amended

5 Section 20-111.1 of the Code of Virginia (1950), as amended.

6 Maretta v. Hillman, 283 Va. 34 (2012).

Estate Planning Attorney Alison K. Noll

Alison Noll is a Principal in Offit Kurman’s Tysons Corner office. Ms. Noll assists individuals, families, and small business owners with all of their estate planning needs. She can be reached at 703.745.1802 and