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Legislative Judgment on Post-Divorce Beneficiaries Can Violate Contracts Clause

By E.L. Lipman

In a Memorandum Opinion and Order issued on Tuesday of this week, U.S. Court District Court Judge Richard H. Kyle held that a 2002 Minnesota law which automatically revokes the designation of a spouse as the intended beneficiary of a life insurance contract, when the couple divorces, can violate the Contracts Clause of the U.S. Constitution.

Sustaining the as-applied challenge to the statute from one Robert G. Ericson, Judge Kyle wrote that ?the legislative judgment that ex-spouses often intend to change their beneficiaries,? but fail to so, ?is insufficient to justify such a radical alteration of pre-existing life-insurance policies? like the one insuring Ericson?s former wife.

While it is only hinted at in the Court?s opinion, no doubt a key point in Mr. Ericson?s favor was the fact that notwithstanding his 1986 divorce from Patricia Copeland, Ericson continued for a period of ten years thereafter to make the premium payments on the insurance policy that designated him as the primary beneficiary.

The Court?s complete analysis is accessible here.

Full post as published by Within the Scope on January 26, 2008 (boomark / email).