New York Estate Planning & Elder Law Blog
In 1997, Ashley Sveen purchased a life insurance policy. Later that year, Ashley married Kaye Melin and named Melin as primary beneficiary on his life insurance policy. Sveen also named his two adult children as contingent beneficiaries.
Several years later, Minnesota amended its revocation on divorce. Sveen and Melin divorced in 2007, but Sveen never changed the beneficiary designation on his life insurance policy. After Sveen passed away in 2001, the insurance company that held the policy requested a court make a judgment on whether Melin or Sveen’s children should receive benefits from the policy.
The United States District Court of Minnesota then granted summary judgment for the Sveen children and awarded them life insurance proceeds. The United States Court of Appeals for the Eighth Circuit reversed and remanded this decision. Subsequently, the court found that the policyholder’s ability to opt out of the law by redesignating his former wife as the beneficiary of the policy did not resolve the issue.
The case was later heard by the United States Supreme Court, which ruled that the Minnesota revocation on divorce statute did not violate the Contracts Clause as applied to the Sveen case. Following the Supreme Court’s decision, the Sveen case has been viewed as a reminder of the important of reviewing beneficiary designations after a major life change occurs. This article reviews some other important facts that you should understand about the role of beneficiary designations in New York state.
The Importance of Beneficiary Designations
Beneficiary designations appear on a number of different estate planning forms. An individual who prepares estate planning documents must name various beneficiaries who will receive specific. While beneficiary are included in wills, they also occur in a number of other documents including retirement accounts, bank accounts, and 401(k)s.
Grounds on which Beneficiary Challenges Are Based
In addition to frequently reviewing and if necessary revising beneficiary designations, it also helps to understand the various grounds on which beneficiary designations can be based.
By taking steps during the estate planning to avoid potential arguments on these grounds, a person is capable of avoiding a number of challenges:
- Many challenges involve the claim that a person lacked adequate mental competency at the time of designating a beneficiary.
- Some beneficiary designations are declared invalid because they are not executed in a manner that satisfies the terms of the provider’s contract.
- Undue influence is a common occurrence in the creation of various estate planning documents. Some of the factors used to demonstrate that undue influence exists include a weakened intellect, the person who benefits took an active role in creating the estate planning document, and a substantial change in a person’s plans or intentions.
- Fraud when a beneficiary designation is involved can occur if a person was coerced into signing a document or signed a beneficiary form believing that in actuality it was something else.
Speak with a Skilled Estate Planning Lawyer
Beneficiary designations are vital. To make matters more complex, the appropriateness of a designation can change as time passes. If you have questions or concerns about beneficiary designations in your estate plan, you should not hesitate to speak with an experienced attorney.
Contact Ettinger Estate Planning today to schedule a free initial consultation.