Ohio Revised Code Section 1339.63 provides that ending a marriage by divorce, dissolution, or annulment automatically revokes the designation of a spouse as beneficiary to an insurance policy owned by the other spouse, unless the beneficiary designation or the divorce decree or judgment specifically provides otherwise. This statute became effective on May 31, 1990. 

Shortly after this statute became effective, it was the subject of litigation when both a former wife and a surviving spouse claimed to be the beneficiary under Lawrence Schilling’s life insurance policy. See Aetna Life Ins. Co v. Schilling (1993), 67 Ohio St.3d 164, 616 N.E.2d 893. Mr. Schilling died three weeks after R.C. 1339.63 became effective. At the time of his death, Mr. Schilling’s former wife was named as the beneficiary under his life insurance policy. Mr. Schilling’s surviving spouse argued that pursuant to R.C. 1339.63 she was the beneficiary by operation of law. 

The Ohio Supreme Court addressed the issue of whether applying R.C. 1339.63 to an insurance policy that existed prior to the effective date of the statute would violate Ohio’s constitutional ban on retroactive laws (Ohio Const. Article II, § 28), and held that such application “impairs the obligation of contracts in violation of Section 28, Article II of the Ohio Constitution.” Id. at syllabus. The former wife received the life insurance proceeds. 

Facts and Analysis of Holycross

More than thirteen years later, the Ohio Supreme Court accepted a discretionary appeal addressing the same statutory revocation statute in In Re Estate of Holycross, 112 Ohio St.3d 203, 2007-Ohio-1. 

In Holycross, Mr. Holycross designated his first wife as beneficiary under his life insurance policy in 1972. They divorced in 1993. The divorce decree did not indicate any change to the policy. In 1997, Mr. Holycross married the Plaintiff, who was his surviving spouse. He died six years later. The insurer paid the proceeds of the policy to the first wife and the second wife contested. 

Plaintiff, the second wife, contended that Schilling is distinguishable because Mr. Holycross divorced his first wife after the effective date R.C. 1339.63. (In Schilling, the divorce was before the effective date of the statute, but the death occurred after the effective date.) More specifically, Plaintiff argued that because the statute existed at the time of the divorce, the first wife:

1. was on notice that her status as a beneficiary would be automatically revoked by operation of law;

2. had an obligation to preserve her status as beneficiary prior to the divorce; and

3. waived her right to claim insurance proceeds by failing to preserve her status.

In the alternative, the Plaintiff requested that Schilling be overturned. 

The Ohio Supreme Court unanimously rejected Plaintiff’s arguments, ruling in favor of the first wife as the proper beneficiary of the insurance policy. First, the Court found that Schilling is indistinguishable, noting that “[t]he critical issue in Schilling was the date that the insurance contract was entered into, not the date of the divorce” as Plaintiff asserted. Then, the Court analyzed Schilling under the legal test used to determine whether a prior decision of the Court should be overturned (see Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216, 2003-Ohio- 5849) and determined that there is “insufficient justification” to overturn Schilling. 

Thus, the law in Ohio remains clear: R.C. 1339.63 does not apply to an insurance contract entered into prior to May 31, 1990, irrespective of the date of the divorce, dissolution, or annulment. Stated in other words, upon divorce, dissolution or annulment, there is no automatic revocation of the designation of a former spouse as beneficiary under a life insurance policy issued prior to May 31, 1990.