The trainwreck of a divorce...

[WinoBlues]

Anyone deal with a divorce attempting to collect on a policy after they've been divorced from the ex-spouse that just passed?

Had an interesting claim this week.

Yes.

A few times. All in California.
I do not recall if community property state matters.

If the bene had been charged to "Bertha Butt, ex spouse" she got the cheddar. If it still said "Berta Butt, spouse" it goes to Contingents or estate if none.

Does not matter who was payor.

Wait until you return a call to the ex / payor to let them know the ex's girl friend is bene.

 

[DayTimer]

Insurable interest only needs to be established at the time of application.

Yes, and marriage is not necessarily ... necessary to have insurable interest.

Heck, I'd bet 50% of my FE client's beneficiaries is a domestic partner, not a spouse in the legal sense.

 

[Allen Trent]

Whoever is listed as beneficiary gets the funds, whether it's an individual or a trust. Beneficiary designations trump wills.

If there isn't a specific or eligible beneficiary, then it will be included in the probate estate.

That is definitely not true in most states when spouse is listed as bene & no longer is the spouse. Most states void the spouses rights to be owner or bene of a policy unless specifically spelled out in the divorce decree or a new bene for submitted after divorce naming the sane person as "ex spouse".

Problem is most people use default divorce decree & those follow state laws that normally void the right to be owner or bene after divorce is final

 

[Allen Trent]

Based on that, they're going back to the divorce decree... which can make sense. I'm sure the legal team of the company is acting within the law. Hopefully contingent beneficiaries are listed.

I always share this video when anyone has questions regarding beneficiaries.

Many states don't involve the contingent. Contingent only comes into play when primary died before insured. In most states, the death claim should go to probate to determine who should receive when ex spouse not allowed to be paid (either per divorce decree or a new beneficiary form submitted after divorce to name ex spouse)

 

[Allen Trent]

Insurable interest only needs to be established at the time of application.

That is true, but state divorce laws drive this topic, not insurable interest. The person that had insurable interest was labeled as a spouse & they no longer are the spouse after divorce

 

[DHK]

That is definitely not true in most states when spouse is listed as bene & no longer is the spouse. Most states void the spouses rights to be owner or bene of a policy unless specifically spelled out in the divorce decree or a new bene for submitted after divorce naming the sane person as "ex spouse".

Problem is most people use default divorce decree & those follow state laws that normally void the right to be owner or bene after divorce is final

Never heard that before, and I was just in a session where a law professor was expounding that beneficiary designations supercede everything else. I'll have to ask about that next time I see him.

 

[Allen Trent]

As you know I am not an agent. Just curious here.

If making payments means she is the owner of the policy and she had a legitimate insurable interest in the decedent when the policy was issued, how can the courts take the money away from her?

Here is example in Michigan. Unless specifically negotiated in divorce decree as allowed, owner & beneficiary rights are revoked at time of divorce: [EXTERNAL LINK] - What If Your Ex Is The Beneficiary Of Life Insurance In Michigan? - Goldman & Associates Law Firm.

 

[Allen Trent]

Never heard that before, and I was just in a session where a law professor was expounding that beneficiary designations supercede everything else. I'll have to ask about that next time I see him.

He likely meant in general that is true that valid bene designations supercede other documents like wills/trusts. However, in many states the beneficiary designation becomes invalid the minute a divorce happens.

Seen dozens of these over the years. On occasion, carrier might pay contingent depending on state of residency at time of claim. In most I saw, the money was paid to probate & creditors paid first.

I know 2 agents sued over it because they had PC & life on the clients. Because they made changes to auto & home policies at divorce, agents had no excuse as to why they didnt update to restate the beneficiary to be "ex spouse". a life only agent might not be exposed as much to know someone got divorced

What If Your Ex Is The Beneficiary Of Life Insurance In Michigan? - Goldman & Associates Law Firm

Throughout your marriage, you get insurance to make sure your wife and children will be provided for financially in the case of your passing. What if your ex is the life insurance beneficiary? Your wife becomes your ex if you get divorced. She no longer qualifies as a beneficiary of your life...

akivagoldman.com

 

[Allen Trent]

This article says 26 states revoke ownership/bene rights at time of divorce: [EXTERNAL LINK] - Pinney Insurance | Life Insurance Beneficiaries and Revocation Upon Divorce

 

[DonP]

I’m a little confused . My friend had a $2 mil 30 yr level term policy . For reasons his wife was owner and beneficiary. When they divorced he tried to cancel policy but company refused as she was the owner . No court can stop her from receiving the proceeds or cancel the policy unless it’s in the divorce decree .I’m many divorces the courts can force someone to keep the policy with the ex as beneficiary correct ?