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STATE OF MINNESOTA IN COURT OF APPEALS A09-349 In re the Marriage of: Loretta Marie Angell, petitioner, Appellant, vs. Gordon William Angell, Jr., Respondent. Filed December 29, 2009 Affirmed in part, reversed in part, and remanded Ross, Judge Carlton County District Court File No. 09-FA-07-322 Arthur M. Albertson, 101 West Second Street, Suite 204, Duluth, MN 55802-5004 (for appellant) Peter L. Radosevich, P.O. Box 384, Esko, MN 55733 (for respondent)

Considered and decided by Schellhas, Presiding Judge; Minge, Judge; and Ross, Judge. SYLLABUS 1. In a dissolution proceeding, life-insurance and death-gratuity benefits

received during marriage by only one spouse who is found to be the decedents sole beneficiary are nonmarital property under Minnesota Statutes section 518.003. 2. Under the Supremacy Clause, federal anti-attachment statutes that protect

military death benefits paid to a beneficiary from attachment, levy, or seizure preempt Minnesota Statutes section 518.58, subdivision 2 to the extent that the subdivision

authorizes district courts to award the beneficiarys spouse a portion of those benefits as divisible nonmarital property. OPINION ROSS, Judge The former husband and wife in a marriage dissolution proceeding respectively challenge the district courts classification and division of death benefits paid after their son died during active military duty. The son had named only his mother as the

beneficiary of his military life-insurance policy, which, by federal law, also made her his beneficiary in a federal death-gratuity program available to active-duty service members. The district court classified these funds as Loretta Angells exclusive nonmarital property but awarded Gordon Angell a share to prevent an unfair hardship. Loretta Angell argues that this award violated federal anti-attachment statutes protecting military death benefits. Gordon Angell filed a notice of review challenging the district courts property classification. He argues that the district court should have classified the life-insurance and death-gratuity benefits as marital property because Loretta Angell did not acquire them as a gift, bequest, devise, or inheritance and because she did not overcome the presumption that property accumulated during marriage is marital property. Because we conclude that the district court properly classified the life-insurance and death-gratuity benefits as Loretta Angells nonmarital property, we affirm the courts classification. But we hold that federal law prohibits the district court from relying on state law to divide the benefits between the parties. We therefore affirm in part, reverse in part, and remand. 2

FACTS Gordon and Loretta Angells 27-year marriage ended in dissolution in 2008. A life-insurance beneficiary designation by one of their five children, Levi Angell, is the focus of this appeal. Twenty-year-old Levi was killed in April 2004 during active military service with the Marine Corps in Iraq. Levi had designated his mother, Loretta Angell, as the sole beneficiary of two funding instruments: his military life-insurance policy and a related federal death-gratuity program. In April 2004, Loretta received $100,000 from the

United States government in death-gratuity benefits payable to the designated survivor of her son, a member of an armed force who died during active duty. See 10 U.S.C.

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Minnesota Law