Military Divorce & SGLI
Divorce proceedings are often complex, with significant financial and emotional consequences for all parties involved. One particular cautionary tale underscores the importance of explicitly addressing beneficiary designations in divorce settlements, especially regarding significant assets like life insurance policies.
In this case, a divorcing couple reached a settlement where the husband (H) was awarded ownership of his Servicemembers’ Group Life Insurance (SGLI) policy. However, while the divorce decree specified that H would retain the SGLI, it did not explicitly direct him to update or change the designated beneficiary from his ex-wife to someone else. Perhaps due to oversight, misunderstanding, or lack of legal guidance, H failed to revise the beneficiary designation after the divorce.
Years later, H remarried and started a new family, which included young children. Tragically, H passed away, leaving his current wife and children in a financially vulnerable position. As the SGLI policy had not been updated, the funds were paid in full to his ex-wife, the beneficiary on file at the time of his death. The ex-wife, now legally entitled to the proceeds, refused to share the funds, leaving H’s surviving spouse and children without the financial support the policy was likely intended to provide.
This heartbreaking outcome highlights the critical importance of updating beneficiary designations promptly after major life changes, such as a divorce or remarriage. Under federal law, the proceeds of SGLI policies are distributed strictly according to the beneficiary listed in the policy at the time of the servicemember’s death. Unlike some state laws that might recognize a new spouse’s claim in similar situations, federal law preempts state statutes in the case of SGLI, leaving no room for exceptions based on intent or equity.
This case serves as a cautionary tale for both individuals and legal professionals handling divorce cases. Divorce decrees should include clear instructions for updating life insurance beneficiaries, retirement accounts, and other critical financial instruments. For the policyholder, it is essential to act swiftly to update beneficiary designations in accordance with their current wishes.
Failing to take these steps can lead to devastating financial consequences for surviving loved ones. While courts may enforce the terms of a divorce decree, they cannot override federal law governing SGLI beneficiary designations. Therefore, personal responsibility in ensuring these updates is paramount to avoid unintended outcomes that could jeopardize the financial future of one’s family.
Lieutenant Colonel (Ret) Trinh Warner is a retired Air Force JAG and an attorney in the San Antonio office of O’Connell West, PLLC. In addition to Family Law, OC-West practices Criminal Law, Military Law and Personal Injury. If you need a free consultation regarding a legal issue, call 512-547-7265.
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