When you buy a life insurance policy, you name a beneficiary who will inherit the proceeds when you die. It’s important to keep that beneficiary designation up to date or the wrong person may benefit.
One such case that went all the way to the Supreme Court was that of Warren Hillman. Hillman died in 2008 shortly after he was diagnosed with leukemia. He was 66. He had been married three times. When he died, his assets included a life insurance policy worth $124,558.03.
But Hillman made an all too common estate planning error. In 1996, while he was working for the federal government, he took out a life insurance policy and named his second wife, Judy Maretta, as his beneficiary. When he and Maretta divorced in 1998, he didn’t change the beneficiary designation on his policy. It was a policy that was part of a life insurance program for all federal employees and the law for that program says that the proceeds on death are paid according to the beneficiary designation.
He married Jacqueline Hillman in 2002 and was with her until he died.
Since his death, his second ex-wife, Judy Maretta, and his widow had been fighting over that money. In June, 2013, the U.S. Supreme Court found that Maretta was entitled to all of it because she was still listed as the beneficiary.
If your life circumstances change, be sure to update the beneficiary forms for any policies that you have. Otherwise, your ex-spouse may get your life insurance proceeds.
For further information about beneficiaries, go to www.diesmart.com.