SCOTUS hears oral arguments in Virginia case involving divorce, life insurance

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Earlier this week, the Supreme Court of the United States heard oral arguments in a very interesting divorce-related case that originated right here in the state of Virginia. The case, Hillman v. Maretta, explores the issue of preemption, meaning whether a state statute is trumped by a federal statute.

According to the facts of the case, federal employee William Hillman designated Judy Maretta, his then-wife, as beneficiary of his life insurance policy held by the Federal Employees' Group Life Insurance Act back in 1996.

The couple eventually divorced in 1998, while William Hillman was remarried in 2002 to Jacqueline Hillman. However, he failed to remove Judy Maretta as the beneficiary on the aforementioned life insurance policy and, as a result, the nearly $125,000 in life insurance proceeds under the FEGLIA went to her instead of Hillman upon his death in 2008.

Jacqueline Hillman subsequently filed a lawsuit against Judy Maretta in Fairfax County Circuit Court seeking the life insurance funds. As part of her argument, she cited a Virginia law that expressly names a widow/widower as the beneficiary of any life insurance policies and automatically revokes any designations of former spouses as life insurance beneficiaries.

Here, the circuit court ultimately sided with Hillman, ordering the funds to be returned. The Virginia Supreme Court, however, reversed this decision, ruling that federal insurance programs -- which named Judy Maretta as the primary beneficiary -- preempted Virginia's state law.

During oral arguments before the U.S. Supreme Court, which agreed to hear the case back in January, Hillman's attorney argued that the states, not the federal government, are solely responsible for all domestic relations matters.

It remains to be seen how the court will decide the case. However, attorneys are saying that above all else, it should remind newly divorced spouses of the importance of updating their estate planning documents and seeing all matters through to a final resolution.

Sources: The Washington Post, "Will the widow or the ex-wife get the money? Supreme Court to decide," Dianna Reese, April 22, 2013; WTOP, "Va. Widow argues case in U.S. Supreme Court," Neal Augenstein, April 22, 2013

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