## Facts

- Mark Sveen married Kaye Melin in 1997.
- In 1998, Sveen bought a life-insurance policy naming Melin as the primary beneficiary and his children from a prior marriage, Ashley and Antone Sveen, as contingent beneficiaries.
- In 2002, Minnesota enacted a revocation-on-divorce statute providing that dissolution of marriage revokes revocable beneficiary designations to a former spouse in a “governing instrument,” including life-insurance policies.
- Sveen and Melin divorced in 2007; the divorce decree did not address the policy, and Sveen did not change the beneficiary designation.
- Sveen died in 2011; Melin and the children both claimed the proceeds.
- A federal district court awarded proceeds to the children under the statute; the Eighth Circuit reversed on Contracts Clause grounds; the Supreme Court granted certiorari.

## Issues

1. Whether applying Minnesota’s revocation-on-divorce statute to a life-insurance beneficiary designation made before the statute’s enactment violates the Contracts Clause.

## Decision

- The Supreme Court reversed the Eighth Circuit (8–1).
- Applying the statute to pre-enactment beneficiary designations does not violate the Contracts Clause because it does not substantially impair the contractual relationship.
- The case was remanded, leaving the ex-spouse’s beneficiary designation revoked and the contingent beneficiaries entitled to the proceeds under state law.

## Legal Principles

- Contracts Clause analysis asks (1) whether a law substantially impairs a contractual relationship and, if so, (2) whether the law is appropriately and reasonably tailored to serve a significant and legitimate public purpose.
- A revocation-on-divorce law may fail to constitute a “substantial impairment” where, taken together:
  - it operates as a default rule consistent with presumed intent after divorce and supports the contractual scheme for nonprobate transfers;
  - it does not defeat reasonable expectations because divorce and family-law authority commonly affect property arrangements tied to marital status; and
  - it is readily reversible by the policyholder through a simple beneficiary redesignation.
- Where no substantial impairment is shown, a court need not proceed to the public-purpose and tailoring inquiry.

## Conclusion

The Court upheld Minnesota’s retroactive application of its revocation-on-divorce statute to an earlier-issued life-insurance policy, holding that the statute’s intent-tracking, easily reversible default rule does not substantially impair contract rights and therefore does not violate the Contracts Clause.


Sveen v. Melin, 138 S. Ct. 1815 (2018)