The South Dakota Supreme Court issued an opinion addressing the complex intersection of divorce law and retirement account beneficiary designations in *Estate of Roger J. Cunningham* (2025 S.D. 59). The case centers on whether divorce automatically revokes an Individual Retirement Account beneficiary designation under South Dakota law.
Roger Cunningham originally designated his then-wife Sheila as the sole beneficiary of his IRA when he opened the account. The couple later divorced in Tennessee, and as part of their negotiated property settlement, Sheila relinquished any claim to the IRA. However, Roger moved to South Dakota before the divorce was finalized and never updated the beneficiary designation on his retirement account.
Following Roger's death, the personal representative of his estate, Susan Metz, filed a motion in probate court seeking a judicial declaration. The estate argued that Roger and Sheila's divorce automatically revoked the beneficiary designation under South Dakota law, effectively removing Sheila as the designated recipient of the IRA funds.
Sheila Cunningham appeared specially in the proceedings to contest the estate's position. Her legal team, led by Elizabeth S. Hertz of Davenport, Evans, Hurwitz & Smith, LLP, raised both jurisdictional and procedural objections to the estate's motion. Sheila challenged the court's authority to make the determination and questioned whether the estate followed proper legal procedures.
The dispute made its way through the South Dakota court system, beginning in the Circuit Court of the Second Judicial Circuit in Lincoln County. The Honorable Jennifer D. Mammenga presided over the initial proceedings. The circuit court granted some relief to the estate, prompting Sheila to appeal the decision to the state's highest court.
The case represents a common legal challenge in estate planning and family law. Many states have enacted statutes addressing what happens to beneficiary designations when couples divorce, but the specifics vary significantly by jurisdiction. Some states automatically revoke spousal beneficiaries upon divorce, while others require explicit action by the account holder.
The legal teams on both sides brought significant expertise to the matter. The estate was represented by Thomas P. Schartz and Tim R. Shattuck of Woods, Fuller, Shultz & Smith, P.C., while Sheila's interests were protected by the Davenport, Evans firm. The case proceeded to oral arguments before the South Dakota Supreme Court on Oct. 9, 2025.
The dispute highlights the importance of updating beneficiary designations following major life events. Financial advisors and estate planning attorneys routinely counsel clients to review and update their retirement account beneficiaries after divorce, remarriage, births, or deaths in the family. Failure to do so can lead to unintended consequences and costly litigation.
The case also demonstrates the complexity that can arise when individuals move between states during divorce proceedings. Roger's relocation from Tennessee to South Dakota while his divorce was pending created questions about which state's laws should apply to the beneficiary designation issue.
Retirement accounts like IRAs are governed by federal law in many respects, but state law often controls beneficiary designation disputes. The Employee Retirement Income Security Act (ERISA) governs many employer-sponsored retirement plans, but individual retirement accounts fall outside ERISA's scope in many situations.
The South Dakota Supreme Court's opinion in this matter will likely provide guidance for similar disputes involving divorced couples and retirement account beneficiaries. The ruling may clarify how South Dakota courts handle situations where account holders fail to update beneficiary designations after divorce.
For estate planning professionals, the case serves as a reminder of the importance of comprehensive post-divorce planning. Simply addressing property division in divorce proceedings may not be sufficient if retirement account beneficiary forms are not properly updated.
The timing of Roger's move to South Dakota also raises questions about domicile and the applicable law. Courts must determine which state's statutes apply when individuals relocate during legal proceedings, particularly in matters involving property rights and estate planning.
The case filed as number 30871 represents one of many disputes that arise when family circumstances change but paperwork remains unchanged. The South Dakota Supreme Court's resolution of this matter will provide important precedent for future cases involving similar fact patterns.
Whether the court ultimately sided with Sheila's position that her designation remained valid or with the estate's argument that divorce automatically revoked it will have implications for divorced couples throughout South Dakota who may face similar situations with their own retirement accounts and beneficiary designations.