Most of us would agree that most divorced spouses don’t want their ex’s to hit the jackpot after one of them’s died because someone forgot to update his or her estate planning documents. You’d be surprised how often this happens.
So in 1951, when wills were the dominant estate planning tool, Florida enacted a statute automatically cutting divorced spouses out of each other’s wills (currently at F.S. 732.507(2)). Then revocable trusts grew in popularity, leading in 1989 to the revocable-trust version of that statute (currently at F.S. 736.1105).
In today’s world the dominant estate planning tool for most of us isn’t a will or trust, it’s life insurance or some other pay-on-death financial product (like annuities, pay-on-death brokerage or savings accounts, and retirement planning accounts). Which means a whole lot of Floridians found themselves litigating “who got what” when an ex-spouse forgot to change his or her beneficiary designation forms (see here, here, here). In 2012 we finally closed that legislative loophole with F.S. 732.703 (see here for my write up of that legislation).
There’s been zero case law in Florida testing the new statute’s constitutionality, but given the huge sums of money at stake, it’s probably only a matter of time. This line of attack’s been tried in lots of other states, with mixed results. After a few early wins, the tide has very much turned against the constitutional-challenge argument. And how do I know that? Because I read a great article by Donna L. Eng and Scott Konopka entitled Is F.S. §732.703 Susceptible to a Constitutional Challenge by a Former Spouse Whose Claim for Benefits is Denied? Their conclusion? Don’t bet on winning a constitutional challenge in Florida. Here’s an excerpt summarizing their findings:
Although no Florida courts have addressed the constitutionality of F.S. §732.703, it would appear that . . . if a former spouse were to challenge [the statute] by arguing that [its] retroactive application . . . violates his or her rights as a designated beneficiary, or that the [statute] violates his or her rights to freedom of contract, as was argued in [Parsonese v. Midland Nat’l Ins. Co., 706 A.2d 814 (Pa. 1998)] and [Whirlpool Corp. v. Ritter, 929 F.2d 1318 (8th Cir. 1991)], such contentions should fail. As noted above, courts in other states and outside the 11th Circuit have noted the flaws in the Parsonese and Whirlpool analysis: 1) Beneficiaries to a life insurance policy have only an expectancy interest, and no vested rights in the policy; 2) decedents should expect that their policy designations would be regulated by the legislature; 3) public policy favors revocation on divorce statutes, as such statutes recognize the intent of a divorced spouse to revoke the designation of a former spouse as a beneficiary under the policy; 4) a revocation on divorce statute would not violate a beneficiaries’ freedom of contract because beneficiaries are not parties to the contract, and have no standing to raise such a claim; and, 5) revocation on divorce statutes do not violate the decedent’s freedom of contract because the statute only affects the donative transfer aspect of the life insurance policy.