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Virginia family law dispute makes its way to U.S. Supreme Court

Many couples in Virginia understand that divorce encompasses much more than ending a relationship. Divorce is actually the dissolution of an official partnership, and as such there are a number of legal issues that have to be sorted out during the process. This includes property division, asset and debt allocation, spousal support, and sometimes child custody and child support. All of these things are guided by state law, but in certain cases federal law may also apply. This is often the case in the divorces of federal employees.

The divorces of federal employees often include complicated legal issues because federal employee health benefits and retirement plans are governed by federal law. So, when federal employees divorce, spouses' rights to certain assets may be subject to a complex web of federal and state laws. A federal employee divorce-related dispute that began in Virginia has recently made it to the U.S. Supreme Court.

Last week the Supreme Court heard the case involving competing state and federal laws pertaining to a federal employee's life insurance benefits.

The case involves a former federal employee who named his wife as a beneficiary to his life insurance policy under the Federal Employees' Group Life Insurance Act in 1996. The couple divorced two years later. In 2002, the man remarried, but he did not change his life insurance beneficiary from his ex-wife to his new wife. The man died in 2008 and his life insurance benefit was paid out to his ex-wife rather than to his widow.

The widow filed a lawsuit under Virginia law to claim the benefit. Virginia law automatically revokes ex-spouses as life insurance beneficiaries. When an insured person does want the insurance benefits to go to an ex-spouse, the insured person must actually re-designate his or her ex-spouse as a beneficiary following the divorce--something the man in this case did not do.

A Fairfax County Circuit Court ruled in favor of the widow and awarded her the insurance benefits that had been paid to the ex-wife. But, the ex-wife appealed the decision and the Virginia Supreme Court reversed the ruling, finding that federal insurance programs are not subject to state laws.

The widow appealed, and now the Supreme Court must decide whether the federal statute preempts Virginia state law. The court's decision could have an impact on how life insurance policies are handled in Virginia divorces. This case illustrates how important it is for divorcing federal employees and spouses of federal employees to discuss their rights and obligations regarding federal benefits with their family law attorneys.

Source: The Washington Post, "Will the widow or the ex-wife get the money? Supreme Court to decide," Diana Reese, April 22, 2013

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