New Utah Case is a Reminder to Check Your Beneficiaries!
A recent case decided by the Utah Supreme Court, Hertzske v. Snyder, reminds us again of the need to keep beneficiary designations up to date. In this case, Linda Snyder and Tyler Hertzske each claim sole entitlement to the death benefits of a life insurance policy on the life of Edward Hertzske. In August 2004, while Linda Snyder and Edward Hertzske were engaged, Edward obtained a $500,000 life insurance policy that named Linda as the primary beneficiary and Tyler as the secondary beneficiary. The terms of the Policy provided a method for naming new beneficiaries during Edward’s lifetime, but was silent as to whether the designation of a spouse as a beneficiary would survive a divorce. Linda and Edward were married in March 2005 and separated at the end of 2011. In May 2013, Edward executed a will disinheriting Linda. In January 2014, Edward filed for divorce. During the proceedings, the life insurance policy was never addressed. A divorce decree was entered in May of 2014 that again failed to address the policy. Edward died about a month after the divorce decree was entered.The Utah Probate Code provides that a beneficiary designation on a life insurance policy is revoked upon divorce unless the “express terms” of the policy as “a governing instrument, a court order, or a contract relating to the division of the marital estate” indicate otherwise. This means that while there is a presumption that the designation is revoked, that presumption can be rebutted.Ultimately, the Utah Supreme Court determined that Linda had not overcome the presumption that her designation as a beneficiary was revoked by the divorce. Many, but not all, states have laws similar to that in Utah. However, the moral of the story is as follows – make sure that you regularly check your beneficiary designations to ensure that they are up to date. Just because you update your will or trust it does not mean that your beneficiary designations follow suit. If you are going through a divorce, make sure that the decree addresses assets like life insurance policies. I guarantee that a substantial amount of money was spent litigating this issue before the courts in the state of Utah. Save your heirs the headaches and the money of litigation. Make sure you check your beneficiary designations upon the occurrence of any major life event, but no less frequently than annually and update as needed.