by Guest » Sat Sep 24, 2011 11:16 pm
My ex-husband named me as beneficiary on his ADD policy which was provided by his city/county job. He signed the rider portion of this policy before our divorce was final, but he's paid into it and even used the disability portion recently, so not sure if that date will hold. And based on what I've read, I was pretty sure I'd be d'qed as ex-spouse, CA law. The widow offered to split the benefits with me. But before I agreed to split, I was curious what the insurance company had to say, so I contacted them and they wouldn't say anything without me providing them with my divorce decree, which I did. Upon review, they denied my claim as California is a state that excludes ex-spouses if policy was in effect prior to divorce.
I don't want to fight over this. I am fine with 1/2, but curious how widow can get benefits as my name was still on this portion of policy. Can you comment please? I would like to take the easiest way out. But I don't want the insurance company to win, if there is a simple way to proceed, please advice. I am willing to sign a waiver for her attorney-but want to check with you 1st.
Thanks
I don't want to fight over this. I am fine with 1/2, but curious how widow can get benefits as my name was still on this portion of policy. Can you comment please? I would like to take the easiest way out. But I don't want the insurance company to win, if there is a simple way to proceed, please advice. I am willing to sign a waiver for her attorney-but want to check with you 1st.
Thanks
Posted: Sun Sep 25, 2011 01:49 pm Post Subject:
California changed its Probate Code, effective January 1, 2002, so that divorced spouses sever all ties to "nonprobate transfers" (which includes life insurance). However, the Code does state:
5604. (a) This part is operative on January 1, 2002.
(b) Except as provided in subdivision (c), this part applies to an instrument making a nonprobate transfer or creating a joint tenancy whether executed before, on, or after the operative date of this part.
(c) Sections 5600 and 5601 do not apply, and the applicable law in effect before the operative date of this part applies, to an instrument making a nonprobate transfer or creating a joint tenancy in either of the following circumstances:
(1) The person making the nonprobate transfer or creating the joint tenancy dies before the operative date of this part.
(2) The dissolution of marriage or other event that terminates the status of the nonprobate transfer beneficiary or joint tenant as a surviving spouse occurs before the operative date of this part.
The Probate Code also states:
5603. Nothing in this part is intended to limit the court's authority to order a party to a dissolution or annulment of marriage to maintain the former spouse as a beneficiary on any nonprobate transfer described in this part, or to preserve a joint tenancy in favor of the former spouse.
So if your divorce occurred prior to January 1, 2002, the law does not apply to you . . . unless in your divorce order you waived your right to such proceeds. If your divorce order specifically grants life insurance proceeds to you (although ADD is not really life insurance, the death benefit is a nonprobate transfer, and would technically fall into the same category), the Probate Code does not disqualify you.
Additionally, if your ex-husband specifically named you as the beneficiary AFTER the divorce, then the Probate Code does not apply, because a person is free to name anyone or anything as his or her beneficiary.
Finally, if the ADD policy was part of an ERISA-governed employer-sponsored benefit plan (it's not an ERISA benefit if it was "optional, additional insurance" that was not provided automatically to all employees), because ERISA is federal law and usually preempts state law, the PLAN DOCUMENT for the employee benefit plan might not exclude you as the beneficiary, and if your ex-husband did not declare a new beneficiary, you would remain entitled to 100% of the benefit (minus, perhaps, any portion previously paid out under the accidental dismemberment part of the coverage).
So, before you go waiving your right to anything, make sure you are not still entitled to 100% of something.
Start by reading your divorce order to see if you waived your right to future insurance proceeds. If you did, then you are out of luck, because the courts have held that even if you were the beneficiary under the ERISA plan, your waiver outside ERISA does not entitle you to keep the money. And there's nothing you can do about it.
An ERISA plan document can also remove divorced spouses from entitlements to plan benefits. But if this is an ERISA plan benefit and you were name the beneficiary AFTER your divorce was final, then you are still the beneficiary unless you were changed before your ex-husband's death.
Finally, if after all was said and done, you and the new spouse do come to an agreement to split the proceeds 50-50, the new spouse should know that she will be creating a GIFT TAX liability for herself if the amount she pays you is more than $13,000. Because a beneficiary cannot create additional beneficiaries with whom they may share the money. The only "beneficiary/beneficiaries" are those who were named and living at the time of the insured's death. As for the money you would receive, it's a gift and it's tax-free to you.
Posted: Wed Sep 28, 2011 08:12 am Post Subject: beneficiary.
So the wife should be the owner and beneficiary of a life policy in CA. on her husband..
Posted: Wed Sep 28, 2011 12:25 pm Post Subject:
So the wife should be the owner and beneficiary of a life policy in CA. on her husband.
That's one way, but it doesn't necessarily get around the probate law. It would still require renaming the beneficiary following a divorce, or explicit language in the divorce decree that avoids the disqualification.
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