by Guest » Wed Jan 13, 2010 03:15 am
My stepfather died leaving his ex-wife as beneficiary (he never changed it to my mother as they were only married 4.5 months.)
However, the divorce decree clearly states that as part of the divorce the former wife has no rights to any life insurance policy.
So... would the policy end up being paid to his current wife (my mother) or the estate (of which my mother is the rep) or what?
Anyone? Thanks in advance.
However, the divorce decree clearly states that as part of the divorce the former wife has no rights to any life insurance policy.
So... would the policy end up being paid to his current wife (my mother) or the estate (of which my mother is the rep) or what?
Anyone? Thanks in advance.
Posted: Sun Jan 17, 2010 02:58 pm Post Subject:
A divorce decree is a contract between the parties getting divorced.
An insurance policy is a contract between the owner of the policy and the insurance company.
The insurance company must abide by the terms of the insurance contract. They are not a party to the divorce decree so without a court ordering them to do something different, they must pay to the beneficiary.
Posted: Sun Jan 17, 2010 10:14 pm Post Subject:
The attorney feels that since the the divorce followed the original assignment of her as beneficiary that it would negate the standing. Unfortunatley I wasn't there to address the info I've been given here.
So assuming the ex-wife gets the check, given the divorce decree is there a cause of action against the ex-wife on behalf of the estate for keeping or accepting monies she's given up all rights too? I understand of course we're probably treading into territory that exceeds the nature of the forum.
Posted: Sun Jan 17, 2010 10:45 pm Post Subject:
That's a question that would most likely require legal action and a court decision, or settlement between parties.
The rule is money gets paid to her. The grey area is, as you've decribed, she's legally agreed not to accept it.
Posted: Mon Jan 18, 2010 09:57 am Post Subject:
I learned that the ex-wife went down to the company where my step-father worked (a major auto maker) and claimed that she was still married to him and signed up to get pension benefits. They actually sent her the first check which went to my mom's house.
This violates federal law which, in the absence of the new wife's affirmative act of signing away her right to the assets/benefits, makes the current lawful spouse the de facto beneficiary of retirement plan assets/benefits. If the statements above are factual, the new wife would have a cause of action against the pension plan trustee for any monies actually received by the ex-wife, and the pension plan trustee, in turn, would have a cause of action against the ex-wife who had no legitimate claim to the benefits. There is no similar requirement of federal law regarding life insurance proceeds. Recovering the money is an entirely different story, especially after it's been spent.
A divorce decree is a contract between the parties getting divorced.
Although it might be thought of as such, technically speaking, this is not correct, since marriage is, technically speaking, not a contract but an agreement. A divorce decree is simply a civil court order ("decree"), not a contract, which must be recognized by other courts or jurisdictions as taking precedence over the prior agreement it negates, such as the mutual agreement to be married.
Courts do not generally have authority to order insurance companies to pay policy proceeds to persons other than the named beneficiaries, although they do have the authority to find/declare a named beneficiary as "disqualified" from receiving the proceeds -- as in the case of a criminal act on the part of the beneficiary that leads directly to the payment of policy proceeds (just ask Scott Peterson how much of Laci's life insurance proceeds he was able to take to state prison following his conviction for her murder) -- and if declared disqualified, an insurance company would be legally prevented from paying the proceeds to that person.
Some states, like New York, have laws that require insurance companies to abide by divorce decrees if they have been properly served on the insurance company by the party which will ultimately benefit, such as an irrevocable beneficiary.
Having said all this, as BNTRS pointed out, keeping one's beneficiary(ies) current with one's insurance company, pension plan trustee, and/or retirement plan custodian is the best recommendation we as agents can make.
Posted: Tue Feb 02, 2010 02:18 am Post Subject: Follow up
Just a follow up to benefit any future readers...
The insurance company referred to Kennedy vs. Plan Administrator for Dupont Investment & Savings Plan and state that indeed the divorce decree could not interfere with the original agreement of beneficiary and that the ex-wife would receive the funds.
However, I noted that the aforementioned case stated that there was some sort of paperwork that was never submitted (something called a QDRO) and I don't know if that's in play in this case or not.
Next step is seeing if there is another way to disqualify the ex-wife, who knows.
Either way, thanks for the input, I hope this thread is of help to others.
Posted: Tue Feb 02, 2010 02:38 pm Post Subject:
Thanks for the update, let us know how it ends.
Posted: Fri Mar 05, 2010 03:14 am Post Subject:
Just submitting something I found while doing DD. In this ruling this Michigan law supersedes the ERISA issue. I believe that Michigan is the only state in which a divorce terminates rights to life insurance etc. Could be wrong.
Does it make a difference where the insurance company is located?
http://www.ocjblog.com/?p=2975
Posted: Fri Mar 05, 2010 02:31 pm Post Subject:
Location of the insurance company wouldn't matter. What does matter is the state in which the contract is issued.
Posted: Sat Mar 06, 2010 03:24 am Post Subject:
Gotcha. It was all done in Michigan.
Posted: Sun Apr 18, 2010 08:34 pm Post Subject: Recourse when beneficiary is overlooked
If the life insurance company ignores the ex spouse who is listed as beneficiary and pays the contingent beneficiaries, what recourse does the ex spouse have
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