Insight

Recent Supreme Court Decisions Highlight Need for Estate Planning and Family Lawyers to Collaborate

Recent Supreme Court Decisions Highlight Need for Estate Planning and Family Lawyers to Collaborate

Jana Aune Deach

Jana Aune Deach

September 3, 2019 04:18 PM

At Moss & Barnett, our estate planning and family law attorneys work closely to address issues that may arise before or after marriage. Without this coordination among advisors, issues can be overlooked resulting in unintended, often negative consequences for the client. Two recent decisions – one by the United State Supreme Court and one by the Minnesota Supreme Court – underscore the importance of this collaboration.

Automatic Revocation of Beneficiary

The first case involved a challenge to a Minnesota law that automatically revokes any beneficiary designation made in estate documents to the former spouse, Minn. Stat. § 524.2‑804, subd. 1 (2016) (the “revocation-upon-divorce statute”). What is more, this dispute went all the way to the United Supreme Court – highlighting the importance of updating the core estate plan, but also beneficiary designations, following a marital dissolution.

In Sveen v. Melin, 138 S.Ct. 1815 (2018), the Court ruled that this law does not violate the contract clause of the Constitution. After Mark and Kaye married, Mark bought a life insurance policy naming Kaye as the primary beneficiary, designating his two children from a prior marriage as contingent beneficiaries. In 2002, Minnesota adopted its revocation‑upon‑divorce-statute. After ten years of marriage, the couple divorced. Mark did not update the beneficiary designations on his life insurance policy, and the divorce decree did not specifically address this policy. Four years later, Mark died, the revocation‑upon‑divorce statute automatically revoked Kaye’s beneficiary status, and the two children became the primary beneficiaries. Kaye objected that the revocation unconstitutionally impaired Mark’s contract rights in the insurance policy.

As judiciously noted by the Supreme Court, “All good trust-and-estate lawyers know that “[d]eath is not the end; there remains litigation over the estate.” Litigation is exactly what occurred. The insurance company filed an interpleader action with the district court to determine whether the revocation statute applied. The two children won in the trial court, but the U.S. Court of Appeals for the Ninth Circuit reversed the district court, holding that the revocation‑upon‑divorce statute impermissibly impaired the contract because it was enacted four years after the policy took effect. The U.S. Supreme Court, in an opinion by Justice Elena Kagan, noted that while the statute did change the beneficiary designated by the policyholder, someone who gets divorced does not usually want to have their former spouse remain as the beneficiary while pointing out that if a policyholder wants to keep a former spouse as the beneficiary following a divorce, he or she simply needs to notify the insurance company and update a form. Thus, the law falls within the “minimal paperwork burden” that the Supreme Court has allowed other laws to impose without violating the contracts clause.

This case highlights the importance of updating one’s estate plan following major life events such as a divorce. Beneficiary designations are often overlooked in the dissolution process, and the failure to properly update your beneficiary designations may result in unintended distributions. It is imperative that the family law attorney coordinate with an estate planning attorney to ensure not only that the client’s wishes are met, but also that the client is adhering to the terms of the dissolution.

Enforceability of Premarital Agreements

Minnesota’s highest court recently weighed in on the enforceability of premarital agreements (or “antenuptial agreements”) that apply to property accumulated after marriage (“marital property”). In Kremer v. Kremer, 912 N.W.2d 617 (Minn. 2018), the Minnesota Supreme Court held that common law provides the test for measuring the procedural fairness of a premarital agreement that deals with marital property. Prior to Kremer, it was generally understood that the statutory test under Minn. Stat. § 519.11, subd. 1, applied to all premarital agreements (executed on or after August 1, 1979), regardless of whether the agreement addressed the distribution of non-marital property, marital property, or both.

The couple in Kremer had planned a destination wedding in the Cayman Islands. The soon‑to‑be husband approached his fiancée just three days before they were scheduled to leave for their wedding with a fully prepared agreement that he had signed. He made it clear to his fiancée that if she did not sign the agreement the wedding would be canceled. The couple’s family members had already paid for their travel to the wedding, and some of them were on their way to the Cayman Islands. The soon-to-be wife was not able to meet with the attorney she had previously used. She was able to meet with another attorney and signed the agreement. The couple left for their wedding the next day and were married. When the wife later filed for divorce, she challenged the enforceability of the premarital agreement.

The Minnesota Supreme Court began its analysis of procedural fairness by determining whether any portions of the agreement addressed non-marital property. Any such provisions would have been subject to the less strict statutory test, which requires: (1) full and fair disclosure of each party’s earnings and property; and (2) that each party had an opportunity to consult with legal counsel of his or her choice. Because the couple’s premarital agreement only made general references to “property” and did not clearly distinguish between “marital” and “non-marital” property, the Supreme Court held the entire agreement was subject to the more stringent common law test.

Under the common law test, a premarital agreement is procedurally fair if: (1) there was a full and fair disclosure of the parties’ assets; (2) the agreement was supported by adequate consideration; (3) both parties had knowledge of how the terms of the agreement impacted their rights; and (4) the agreement was not procured by undue influence or duress.

In Kremer, the Minnesota Supreme Court concluded that the couple’s agreement failed the procedural fairness analysis under the common law test. Specifically, the Court held the agreement lacked adequate consideration and was procured by duress due to the timing of the wedding and the husband’s “threat to call off the wedding.” As a result, the premarital agreement was invalid and unenforceable.

In practice, most such agreements address the characterization and division of both non-marital and marital property. Thus, if the enforceability is challenged, it is generally safe to assume that at least some portion of the agreement will be analyzed under the multi-factor common law test and not the less exacting statutory test for procedural fairness.

Spouses who entered into a premarital agreement before the Kremer decision may want to have an attorney review their agreement and surrounding circumstance to determine if it has any legal deficiencies. If the pre‑Kremer agreement is seriously defective, it may be necessary for the couple to enter into a post-marital agreement to amend their original agreement.

It is important to have both a family law attorney and an estate planning attorney review provisions in a premarital agreement to ensure that the agreement meets both the statutory and common law requirements. Without this collaboration, portions of the agreement can be deemed invalid.

Conclusion

The Sveen and the Kremer cases underscore the importance of collaboration between estate planning and family law attorneys. Long-standing premarital agreements can be found invalid or result in unintended consequences, and beneficiary designations may be changed by operation of law. These cases also demonstrate the need for ongoing review and updating of estate plans to be sure that they have not been affected by later developments in the law – and to ensure that they still meet the goals of the parties.

Related Articles

"Lawyer of the Year"


Lawyer in suit poses for a headshot photo

Jeffrey A. Weissman

Family Law

Fort Lauderdale, FL

2024

IN PARTNERSHIP

Coffey Burlington: A Legacy of Legal Excellence


by John Fields

In complex practice areas, such as business litigation and white-collar defense, Miami-based firm Coffey Burlington continues to set a standard of excellence.

Group of lawyers pose for law firm picture

"Lawyer of the Year"


Image of NorCal Lawyer of the Year honoree

Michèle M. Bissada

Family Law

San Jose, CA

2024

The Benefits of Charitable Giving in New York Estate Planning


by Best Lawyers

In this article, Best Lawyers breaks down the advantages and disadvantages of factoring in charitable donations when estate planning in New York state.

Animated hand giving a gift with bow on top

A Balancing Act


by Joseph Milizio

New York State recently passed a landmark law that expands LGBTQ couples’ ability to start a family while protecting surrogates’ rights.

Surrogacy Rights for LGBTQ Couples

Fostering Acceptance


by Cassandra Biron

Those looking to be a foster or adoptive parent for LGBTQ youth must understand which kinds of support are most beneficial to parent and child alike. Happily, resources are now more widely available than ever.  

Resources for Fostering LGBTQ Youth

Is Family Law Mediation the Future of Conflict Resolution?


by Best Lawyers

In recent years, family law mediation has started to emerge as the preferred option over traditional forms of litigation, offering clients an amicable and efficient alternative of conflict resolution.

Silhouettes of family split into multiple sections

IN PARTNERSHIP

Protecting Your Personal Injury Settlement: The Importance of Consulting With a Family Lawyer


by Forum Law and Yegendorf Rashid Injury Lawyers

Victims of personal injury in Ontario may not realize that their case settlements and financial winnings could be at risk in the event of a divorce. A family law lawyer can help.

Teddy bear with bandages laying down with orange background

The Top 7 Things to Know Before Filing for Divorce


by Best Lawyers

Consulting with a qualified divorce attorney can help you understand your rights and obligations when filing for divorce. Here are 7 things you should know.

Two golden wedding bands with a crack down the middle

It’s All Relative


by Paula Birch Billingsley

Relative adoption can be infant adoption too; it happened to us and was quick, easy and inexpensive.

Private Adoption of A Relative’s Child

Announcing the 2022 Best Lawyers: Family Law Publication


by Best Lawyers

Featuring the top legal talent in Family Law and Trusts & Estates.

Announcing Best Lawyers Family Law 2022

Crossing the Line


by Joseph Trotti

Divorce can be difficult, complicated and emotionally exhausting. Divorcing across state lines ups the jurisdictional complexity significantly.

Jurisdiction and Divorce Across State Lines

Trouble at Home


by Brittney M. Miller and James J. Vedder

Decisions about custody and parenting time after a separation or divorce are never simple. Family violence of any kind makes the process all the more complex—and the victim isn’t always the beneficiary.

How Domestic Violence Complicates Custody

Inoculation Disputation


by Justin Smulison

Vaccine uptake has become one of the most contentious issues in American life. Divorced parents who disagree about it are creating a welter of new custody cases in family court—and precedent is scarce.

Divorced Parents Disagree on Child Vaccine

The New PPE


by Jennifer Stavros

How to plan your pandemic preparedness estate—all from the safety of home.

Planning Your Digital Estate Plan

The 2021 Best Lawyers in Family Law


by Best Lawyers

Featuring the top lawyers practicing in Family Law and Trusts & Estates.

The 2021 Best Lawyers in Family Law

Trending Articles

Announcing the 2023 The Best Lawyers in America Honorees


by Best Lawyers

Only the top 5.3% of all practicing lawyers in the U.S. were selected by their peers for inclusion in the 29th edition of The Best Lawyers in America®.

Gold strings and dots connecting to form US map

Announcing the 2022 Best Lawyers® in the United States


by Best Lawyers

The results include an elite field of top lawyers listed in the 28th Edition of The Best Lawyers in America® and in the 2nd Edition of Best Lawyers: Ones to Watch in America for 2022.

2022 Best Lawyers Listings for United States

2021 Best Lawyers: The Global Issue


by Best Lawyers

The 2021 Global Issue features top legal talent from the most recent editions of Best Lawyers and Best Lawyers: Ones to Watch worldwide.

2021 Best Lawyers: The Global Issue

The U.S. Best Lawyers Voting Season Is Open


by Best Lawyers

The voting season for the 31st edition of The Best Lawyers in America® and the 5th edition of Best Lawyers: Ones to Watch® in America is officially underway, and we are offering some helpful advice to this year’s voters.

Golden figures of people standing on blue surface connected by white lines

How To Find A Pro Bono Lawyer


by Best Lawyers

Best Lawyers dives into the vital role pro bono lawyers play in ensuring access to justice for all and the transformative impact they have on communities.

Hands joined around a table with phone, paper, pen and glasses

The Best Lawyers in Australia™ 2024 Launch


by Best Lawyers

Best Lawyers is excited to announce The Best Lawyers in Australia™ for 2023, including the top lawyers and law firms from Australia.

Australian Parliament beside water at sunset

How Palworld Is Testing the Limits of Nintendo’s Legal Power


by Gregory Sirico

Many are calling the new game Palworld “Pokémon GO with guns,” noting the games striking similarities. Experts speculate how Nintendo could take legal action.

Animated figures with guns stand on top of creatures

What the Courts Say About Recording in the Classroom


by Christina Henagen Peer and Peter Zawadski

Students and parents are increasingly asking to use audio devices to record what's being said in the classroom. But is it legal? A recent ruling offer gives the answer to a question confusing parents and administrators alike.

Is It Legal for Students to Record Teachers?

Inflation Escalation


by Ashley S. Wagner

Inflation and rising costs are at the forefront of everyone’s mind as we enter 2023. The current volatile market makes it more important than ever to understand the rent escalation clauses in current and future commercial lease agreements.

Suited figure in front of rising market and inflated balloon

The Upcycle Conundrum


by Karen Kreider Gaunt

Laudable or litigious? What you need to know about potential copyright and trademark infringement when repurposing products.

Repurposed Products and Copyright Infringemen

8 Different Types of Criminal Defenses in Law


by Best Lawyers

Learn about the different types of criminal defenses available in law, including innocence, self-defense, insanity and more. Protect your rights today.

Silver handcuffs laying on finger printed papers

Best Lawyers: Ones to Watch in America for 2023


by Best Lawyers

The third edition of Best Lawyers: Ones to Watch in America™ highlights the legal talent of lawyers who have been in practice less than 10 years.

Three arrows made of lines and dots on blue background

A Celebration of Excellence: The Best Lawyers in Canada 2024 Awards


by Best Lawyers

As we embark on the 18th edition of The Best Lawyers in Canada™, we are excited to highlight excellence and top legal talent across the country.

Abstract image of red and white Canada flag in triangles

Wage and Overtime Laws for Truck Drivers


by Greg Mansell

For truck drivers nationwide, underpayment and overtime violations are just the beginning of a long list of problems. Below we explore the wages you are entitled to but may not be receiving.

Truck Driver Wage and Overtime Laws in the US

Choosing a Title Company: What a Seller Should Expect


by Roy D. Oppenheim

When it comes to choosing a title company, how much power exactly does a seller have?

Choosing the Title Company As Seller

The 2024 Best Lawyers in Spain™


by Best Lawyers

Best Lawyers is honored to announce the 16th edition of The Best Lawyers in Spain™ and the third edition of Best Lawyers: Ones to Watch in Spain™ for 2024.

Tall buildings and rushing traffic against clouds and sun in sky