The Supreme Court recently issued an opinion parsing out the practical concerns at play in a post-divorce life insurance case. Specifically, in Sveen v. Melin, a former spouse designated as primary beneficiary in her ex-husband’s life-insurance policy urged the Court to dissect the constitutionality of a Minnesota statute that automatically revoked such designation upon divorce. After review, the Supreme Court determined that revocation-upon-divorce statutes are indeed constitutional when applied retroactively.
To better understand the case at hand, consider the following facts: Mark Sveen married Kaye Melin in 1997 and designated her as the primary beneficiary of his life-insurance policy. In 2002, Minnesota revised its code so that the designation of a spouse as a beneficiary would automatically be revoked upon divorce. Mark and Kaye divorced in 2007, and much to the surprise of his children, he failed to update the beneficiary designation. So, when Mark died in 2011, the insurance company was uncertain how to proceed: should it pay the proceeds to Mark’s ex-wife (Kaye), or alternatively, to Mark’s children? Phrased differently, should the insurance company follow Mark’s original instruction, or alternatively, Minnesota’s new statute? Given this predicament, the insurance company asked the Court for help.
In an 8-1 opinion, the Court held that the retroactive application of Minnesota’s revocation-upon-divorce statute does not violate the contracts clause of the Constitution. According to the Court, the law in this case was meant to reflect the policyholder’s intent, thus supporting, rather than frustrating, the contractual scheme. Reasonably so, Mark, amongst many others, would probably not want his life insurance proceeds to pass to his ex-wife. Furthermore, the law in this case was unlikely to defeat the policyholder’s expectations, as the policyholder could not sensibly assume a beneficiary designation would remain in place post-divorce. Moreover, the law in this case purely functioned as a default rule, which the policyholder could undo at any point in time by submitting a new beneficiary designation form. According to the Court, the hassle, or lack thereof, of such negligible paperwork does not violate the contracts clause under its established precedent.
Like Minnesota, Texas has a similar statute under the Texas Family Code §9.301, which is why the Supreme Court’s decision is particularly relevant to us. In Texas, a divorce invalidates any pre-divorce designation of the former spouse as a beneficiary of life insurance unless (1) the decree designates the insured’s former spouse as the beneficiary, (2) the insured re-designates the former spouse as the beneficiary after rendition of the decree, or (3) the former spouse is designated to receive the proceeds in trust for, on behalf of, or for the benefit of a child or a dependent of either former spouse. It is important to keep in mind, however, that this state statute is preempted by ERISA!
This post comes from Saira Ukani, summer law clerk for O’Neil Wysocki. Saira is a law student at the University of Texas School of Law. She is interested in family law as a career after law school. We are happy to have her helping with our blog as well!
Of the many big and small inequalities, we cannot overlook the right of a woman to end a difficult marriage. While divorce may be common place and social acceptable for women today, it has not been that way in history.
Throughout modern time, divorce could only be granted if one spouse proved “fault” – usually either adultery or cruel treatment – in a court of law. Some states in the US went further and required that a divorce be approved by the state legislature!In order to have such a contested type of suit, in a male-dominated arena with male lawyers and male judges, a woman would first have to have the guts to tell her business in public, then she would have to find the financial mean to hire a (male) lawyer to handle her case. In the good-old-boy system that existed back then, she couldn’t be sure that the male lawyer she hired wasn’t one of her husband’s social buddies. In short, only women who had wealth could effectively get divorced. A woman who was from a lower socio-economic situation would be stuck in a bad marriage with a violent man without much recourse.
In the 1970’s, with the advancement of women’s equality, along came no-fault divorce. This means that a woman could just say she wanted a divorce, without having to “prove” anyone did something wrong, to get released from a bad marriage. She wouldn’t have to “air her laundry” in public. She wouldn’t have to prove that her husband had sex with the secretary. She wouldn’t have to document her bruises from the last beating he gave her.
California – and future President Ronald Regan – passed the first no-fault divorce statute in the United States in 1970. Most other states, including Texas followed suit shortly thereafter. New York became the last state to pass no-fault divorce in 2010! (See Wikipedia on no-fault divorce.)
President Regan later regretted his favor for no-fault divorce because he felt that it weakened the institution of marriage, making it too easy to divorce. Statistics support his regreat:
From 1960 to 1980, the divorce rate more than doubled — from 9.2 divorces per 1,000 married women to 22.6 divorces per 1,000 married women.
While less than 20% of couples who married in 1950 ended up divorced, about 50% of couples who married in 1970 did.
And approximately half of the children born to married parents in the 1970s saw their parents part, compared to only about 11% of those born in the 1950s.
Many women who are now able to get out of bad marriages that they couldn’t have before would disagree with his regrets!
Betsey Stevenson, an economist at the University of Pennsylvania who has studied divorce extensively, believes that the introduction of no-fault divorce benefits women. “It leads to a 30 percent decrease in domestic violence. Not only is it easier for the abused to escape their marriages, but potential abusers are also less likely to act because they’re aware that their spouses can leave them. No-fault divorce also makes women less likely to commit suicide.” (See Jamie Kapalko, No-fault divorce: Good for women?)
So, in honor of International Women’s Day, be grateful that you live in a country where you have the RIGHT divorce your husband for a good reason or no reason at all – just because you want to. Like many things… it is OUR choice for what’s best for us, not the government or a man or the church or whoever else wants to meddle. You get to decide whether to stay in your marriage or leave it.
The sources of income for an older divorcing spouse can look very different from younger counterparts. Here are some considerations:
Social security income: Social security is not a marital asset to be considered in the division of marital property. But, social security can be considered in examining a spouse’s cash flow for looking at property division or post-divorce maintenance. A person can begin to access social security benefits as early as age 62 or as late as age 70. And, a spouse or former spouse may get benefits based upon the other spouse’s social security contributions if the marriage lasted longer than 10 years and both spouses are over 62, the divorce has been over for two years, and the spouse seeking benefits has not remarried. The spousal benefit does not affect the amount the employed spouse receives.
Retirement plans: The age for receiving benefits from various types of retirement plans can vary by plan. Knowing the payment provisions for each plan in question may be essential to evaluating a spouse’s cash flow after divorce.
Passive Income: Passive income may include rental property income, dividends, interest income, and business interest distributions. Usually there are little restrictions on passive income, so these assets may be available immediately upon divorce.
Disability income: The sources of disability income may be a government plan, a private plan, or an employment benefit. Some may be taxable, while others are not. Most disability income is considered the separate property of the disabled spouse, but it remains important to know the terms of the individual plan to confirm.
One situation to watch out for is called the “double dip” where a spouse is required to divide or buy out a spouse’s interest in an asset as part of the division of property but then use that stream of income to provide post-divorce support. Thus, the same asset is being used twice for different purposes. This can happen to a family business, retirement benefits, and passive income.
Another possible landmine in senior divorces involves the issue of a person’s right to retire. What if the spouse always planning to retire at 55, but due to divorce or post-divorce support obligations is prevented from doing so by a court order? Or, what if the court determines to impute income to the pre-retirement level to provide post-divorce support for the other spouse?
The opposite of the right to retire early is the abiity to retire. After dividing half of the marital estate to the divorcing spouses, some may discover that they no longer have the ability to retire at age 65. Many may need to continue working in order to avoid a dramatic reduction in their planned retirement lifestyle.
Health issues provide another area where a senior divorce may be more complicated than another type of divorce. Health issues for the non-working spouse may be a ground for post-divorce maintenance support. However, health issues by the spouse with the assets or income could call to a halt any post-divorce support award. It may be better to evaluate awarding a spouse an asset that generates a stream of income rather than relying upon the continued post-divorce support of a spouse if health is a problem.
Another place for consideration with senior divorces is the increase in age-related expenses. Health insurance and medical costs increase with age. Additionally, a disabled spouse may require a caregiver, which also adds to the cash flow problems.
In support order for younger divorcing spouses, courts often order spouses to provide a life insurance policy to secure post-divorce support. However, in the situation of a senior divorce, life insurance may not be available to a spouse to purchase at a reasonable price if there is not already a policy in place.
Divorces among clients over the age of 50 are becoming more prevalent as baby boomers age. They balk at the terms “gray divorce” or “senior citizens”. The best term to use may be “seasoned”, according to an article by Paula G. Kirby in the latest issue of the Family Advocate by ABA Section of Family Law.
Seasoned divorces require certain considerations.
Some seasoned clients may need special accommodations for mobility, hearing, and vision loss or emotional or mental challenges.
Capacity or diminished capacity concerns.
Confidentiality and third party participation by family and friends.
The need for support and assistance for the client.
Obtaining financial, medical, and other information from professionals with joint representation of both spouses.
Handling the stress of protracted settlement negotiations or a long day at mediation.
If the client has issues with hearing or sight, make an ADA accommodations request of the Court for a device to increase sound or a projector to help with sight.
Releasing attachment to the attorney when the case is concluded.
Often I am reminded of the grief and loss that spouses must go through emotionally while I handle the legal aspects of the divorce. Sometimes, clients have already processed through the grief before they come to us and their point of acceptance makes handling the divorce from a logical, business standpoint much easier. However, frequently, the divorce comes as a surprise to one spouse and they have to work through the grief while also processing the legal side. These people are usually much more emotional about the divorce and uncertain about their future. Decision-making is difficult because they are processing so much. These people often process through the stages of grief concurrently with the stages of the divorce. There are even times where a person remains in so much denial that they don’t enter the stages of grief over the loss of the marriage/spouse until the divorce is final.
According to Elisabeth Kubler-Ross in her 1969 groundbreaking book On Death and Dying there are 5 stages of grief and mourning that are universally experienced by people from all walks of life, including the loss of a close relationship. People may work through their bereavement in a different order, spending more or less time at each stated.
Denial and isolation
The first reaction to loss of a relationship or other form of loss is to deny the reality of the situation. This acts as a defense mechanism to buffer the immediate shock of the loss. It carries a person through the first wave of pain.
As the denial wears off, reality sets in. Anger is an intense emotion that stems from vulnerability. Sometimes anger is directed inappropriately, like at the lawyer who is trying to help the person process the divorce.
The normal reaction to the feeling of helplessness and vulnerability that loos brings is the need to regain control. Bargaining with your spouse, or God, or the universe in general is a weaker line of defense to protect from the painful reality. A person may try to say, “God I promise I will never do ______ again, if you will just save my marriage.” But, frequently, the action the subject of the bargain is not the cause of the breakdown of the marriage relationship, so it doesn’t really help. Or, it may be too little too late.
Depression is the stage where many people spend the most time in processing grief. There are two types of depression, according to Kubler-Ross. First is the immediate stage of depression, filled with sadness and regret. The other type of depression may be more subtle and longer lasting. This stage involves the release of the emotional ties to the other person.
The last stage of grief is an acceptance of the loss, marked by a calm withdrawal from social interaction. This stage is not to be confused with depression. Acceptance is more of a coping with reality and moving on.
Working through the stages of grief is important – resisting any part of the grieving process can only prolong the natural healing. Allowing yourself to feel the emotions is important, as is allowing others to comfort you through it. But, also remember that people are resilient with a strong survival instinct. Many people endure terrible losses, including divorce, to thrive in the end. Throughout each stage of grief and through the process, remember where there is life, there is hope and where there is hope there is life. Just keep moving forward, one step at a time.
Being emotionally prepared for divorce is a crucial part of working through the process. It is particularly difficult if one spouse is emotionally prepared and the other spouse is not ready yet. If you are not emotionally ready for divorce, then the emotion will be intertwined with the decision-making that must happen to effectively work through the divorce most effectively. Here are some questions to ask yourself to know if you are ready for divorce:
Is there anything else you could do to save your marriage? Rarely is a divorce caused only by the actions of one spouse. Have you said the words “I’m sorry” for the part you played in the breakdown of the marriage? Sometimes those simple words can be a pathway to finding each other again. Would counseling help?
Are you at peace with the decision to divorce and the changes the decision will cause? Can you walk out of the door without anger, frustration, or hurt? Are you ready to make rational life-changing decision, leaving the emotion aside? Is it possible that you are still in love with your spouse?
Have you educated yourself on the divorce process? Do you have a realistic assessment of the process and what to expect from the divorce?
Do you know the economic realities that divorce will bring to your situation? Can you afford to divorce? Are you willing to accept a lower standard of living, if that is necessary to get a divorce? Are you ready to be financially on your own?
Are you ready to partner with your spouse to co-parent your children? Your marriage may be ending, but your relationship as co-parents will continue forever. Can you set aside the marriage issues and work with your spouse to raise your children? Can you keep your kids out of the adult issues?
If you are not ready for divorce, work with your spouse to try to explore any remaining avenues. Unfortunately, filing for divorce only takes one person. So, one spouse may be ready and file for divorce, even if the other spouse is not ready. For the spouse who has to face divorce before he or she is ready, it is hard to get to an emotional place deal with a divorce forced upon you. It is important to work through things as quickly as you can so you can face the divorce rationally.
You’ve been known as “Mrs. So-and-so” for a long time during your marriage. You went by a different name prior to your marriage. Who should you be after your divorce?
Many women see their married name as a tie to the man they want to be done with, so they want to be rid of the name when they are rid of the man. Many ex-husband’s want their name back, as if it is a possession, because of the bad feelings from the divorce.
Many women want to keep the same name as their children because it is easier when dealing with schools and travelling. Also, many women build up a professional reputation during the marriage using the married name, which they want to keep after the divorce.
The bottom line is that the choice to change the name or keep the married name is the woman’s choice alone. The husband has zero say in which choice she makes. Each woman may have her own good reasons why she makes her choice.
As people make new year’s resolutions to start their new year with a clean slate, some of the best Dallas, Texas family lawyers, as well as family law attorneys across the United States, report a rise of nearly one-third of new divorce filings in January. The American Academy of Matrimonial Lawyers confirms a spike of 25-30% according to a survey of their members. New year’s resolutions are spurred on by a stressful holiday season and maybe even the stress of too much family time. Similar trends are seen in the U.K., where one survey reports that one in five couples plan to divorce after the holidays.
If you are planning to divorce in the new year, one of the most important self-help steps you can take is to become familiar with the financial situation of your marriage. Get an up-to-date assessment of all of the financial accounts owned together or separately. Keeping copies of records given to the CPA when preparing taxes can also provide fertile areas for inspection to make sure that all financial information is addressed in the divorce.
Because divorce is one of the biggest financial decision people make, it is important not to make the decision when you are tired or emotional. Be smart and evaluate your end game – make sure you know the full situation and the consequences from a financial perspective of the decisions you are about to make.
Sometimes, even though the emotional situation of a marriage may be troublesome, divorce may not be the best answer. Frequently one spouse carries the health insurance, which will no longer be available to the other spouse after divorce. For a spouse who needs the health insurance and is not able to affordably get an individual policy, this can be a crucial decision factor.
A state legislator from Fort Worth wants to make it harder to get a divorce in Texas. Rep. Matt Krause, R-Fort Worth, has filed a bill for the legislative session starting in January, proposing to require a party to state a fault reason for divorce or to remain separated for at least three years before finalizing the divorce. (See Lawmaker wants unhappy couples to live apart for 3 years before they can divorce http://www.star-telegram.com/news/nation-world/national/article124180949.html#storylink=cpy) Currently, Texas law allows parties to divorce on the grounds of insupportability — a no-fault finding — with only a 60 day waiting period. If the new law is passed, parties would have to say a reason for the divorce as opposed to a general statement that the parties relationship is irreconcilable. Or, to divorce on grounds of insupportability, they would have to separate for minimum of three years. Kraus thinks it should be more difficult to get a divorce and that the new law will strengthened the sanctity of marriage.
I seriously doubt that this law will pass. No-fault divorce has been in place since the 1970’s (when Texas’ family law code was created) and many people, including many of the currently serving state legislators, have divorced under the law. Instead of litigating over the question of which party caused the divorce, most parties currently just agree to irreconcilable differences and get on with the more important issues of parenting time and division of property.
If this law were to pass, I think it would have two unintended consequences. First, I think it would serve to raise the contentiousness of most divorces, raising the cost of an already expensive process. Second, it would have a chilling effect on many victims of domestic violence escaping their abusers.
In reference to the elimination of fault requirements in New York in 2010, Betsy Stephenson, an economist at the University of Pennsylvania who studies divorce, believes that no-fault divorce benefits women, particularly domestic violence victims. No-fault divorce laws lead to a 30% decrease in domestic violence because it makes it easier for the victim to escape their marriages. It also makes the abuser less likely to act because they are aware that their spouses would leave them. No-fault divorce also makes women less likely to commit suicide, says Stephenson. (See No Fault Divorce: good for women http://www.salon.com/2010/06/17/no_fault_divorce_new_york/ )
Some opponents of fault-divorce claim that no-fault divorce raises the likelihood of divorce and harms the sanctity of marriage. Quite the opposite, according to statistics. Actually, divorce rates began to rise in the 1950’s and peaked in the early 1980’s, all when fault-based divorce was still the majority. In the 1970’s to the present, as all states in the U.S. transitioned to no-fault divorce, the divorce rates have decreased. (Discussion at Religion News Service http://religionnews.com/2013/04/24/what-hath-ssm-to-do/ ).