by Professor » Wed Nov 21, 2012 01:08 am
Hello Everyone,
My brother and I are trying to resolve an annuity claim. In California in 2003, the decedent initially applied for an annuity listing nephews and nieces as beneficiaries. One month later, the decedent filled out an "Annuity Service Request" form designating a local charity as beneficiary.
Twenty-two days after the decedent filled out the beneficiary change form, the life insurance company sent the decedent a copy of the new policy and it designated the nieces and nephews as beneficiary. On the back of that policy was a signature form requesting the decedent sign it acknowledging it as correct. I am not sure if the form was signed and sent in or not.
My brother is the administrator of the estate and our aunt is the decedent who passed a few months ago. We honestly don't know if our aunt changed her mind again about the beneficiary (she was very moody and impulsive), but we are about to send a letter to the life insurance company--who recently sent a letter to my brother indicating the beneficiary was the charity--that our contention is that the nieces and nephews are the legal beneficiaries pursuant to what is stated on the policy.
Does anyone know how the life insurance company will treat our request? In other words, what is the procedure they follow when one contests a beneficiary change. The claim has not been processed and it appears the charity has not been notified. The correspondence from the life insur. co. thus far has been to "Charity C/O my brother." I know my brother should get a lawyer, but he is wanting to try to handle it pro se right now. Any insights are greatly appreciated.
My brother and I are trying to resolve an annuity claim. In California in 2003, the decedent initially applied for an annuity listing nephews and nieces as beneficiaries. One month later, the decedent filled out an "Annuity Service Request" form designating a local charity as beneficiary.
Twenty-two days after the decedent filled out the beneficiary change form, the life insurance company sent the decedent a copy of the new policy and it designated the nieces and nephews as beneficiary. On the back of that policy was a signature form requesting the decedent sign it acknowledging it as correct. I am not sure if the form was signed and sent in or not.
My brother is the administrator of the estate and our aunt is the decedent who passed a few months ago. We honestly don't know if our aunt changed her mind again about the beneficiary (she was very moody and impulsive), but we are about to send a letter to the life insurance company--who recently sent a letter to my brother indicating the beneficiary was the charity--that our contention is that the nieces and nephews are the legal beneficiaries pursuant to what is stated on the policy.
Does anyone know how the life insurance company will treat our request? In other words, what is the procedure they follow when one contests a beneficiary change. The claim has not been processed and it appears the charity has not been notified. The correspondence from the life insur. co. thus far has been to "Charity C/O my brother." I know my brother should get a lawyer, but he is wanting to try to handle it pro se right now. Any insights are greatly appreciated.
Posted: Fri Nov 23, 2012 05:40 pm Post Subject:
Does anyone know how the life insurance company will treat our request? In other words, what is the procedure they follow when one contests a beneficiary change.
Are you saying the beneficiary is the charity and you want to challenge that? Unless Auntie was coerced by the charity to be named her beneficiary, or there was serious mental impariment, "Brother" must properly administer Auntie's affairs and obtain the insurance company money and pass it to the charity as intended.
I know my brother should get a lawyer, but he is wanting to try to handle it pro se right now.
If that's all you know, you don't know what you don't know. An attorney would be an utter waste of time and money, because the law is almost entirely on the side of the most recently named beneficiary.
Posted: Fri Nov 23, 2012 09:04 pm Post Subject:
Thank you for your response.
Are you saying the beneficiary is the charity and you want to challenge that? Unless Auntie was coerced by the charity to be named her beneficiary, or there was serious mental impariment, "Brother" must properly administer Auntie's affairs and obtain the insurance company money and pass it to the charity as intended.
I'm saying it is unclear who the legal beneficiary is and my siblings and I intend to look further into determining who the legal beneficiary is. (1) The change form did not state a specific policy number (she had at least one more annuity); (2) The policy that was sent out subsequent to my aunt's execution of the change form did not reflect any change in beneficiary; and (3) It is quite possible that my aunt signed the acknowledgment form on the last page of the policy affirming the correctness of the policy which, again, did not list the local charity as beneficiary. If so, there is a plausible legal argument that such an acknowledgment vitiates a change form, especially one that does not state a policy number.
If that's all you know, you don't know what you don't know. An attorney would be an utter waste of time and money, because the law is almost entirely on the side of the most recently named beneficiary.
I have a law degree, and while I know zilch about estate and insurance law in California I do know that this warrants further investigation. Which brings me back to my original question: When an insurance company's determination of a legal beneficiary is contested, is there a typical protocol a company follows? E.g. Do they dig deeper into their records and search for other forms of written evidence to clarify the matter? Do they do nothing and wait for subpoenas? etc.
Any insight is appreciated.
Posted: Fri Nov 23, 2012 10:59 pm Post Subject:
When an insurance company's determination of a legal beneficiary is contested, is there a typical protocol a company follows?
Typically, in the case of contested claims, and when informed that probate has been opened, the insurance company simply files an interpleader and deposits the proceeds with the court, effectively satisfying the demand of the contract to pay the money to someone, and statutorily washing their hands of the matter, leaving it up to the court instead to determine the outcome.
Or, the insurance company pays the money to the party that it believes is the proper beneficiary according to its records, in which case it has immunity from any legal proceedings for paying money to the wrong beneficiary. The insurance company is not required to look back any farther than the most current and completed beneficiary statement.
Since insureds and annuitants rarely keep copies of what they send to insurance companies, your contention th3at forms were not properly filled out, would be a matter for discovery.
So if a probate has been opened, the attorney representing the decedent's estate or the personal representative acting as the estate's administrator should write to the insurance company stating a claim for the proceeds on behalf of anyone or anything believed to be the proper beneficiary and denying the validity of any and all other claims. If that demand fails to correspond with the insurance company's best records, they will file the interpleader.
The longer no one acts, the more likely the insurance company will seek out the person it believes is the beneficiary and make the payment according to the contract. Because of the many consent agreements insurance companies are signing with the various states' Depts of Insurance over past practices of not paying claims quickly after discovering a death, they are all more likely today to want to get that money out of their account and into the hands of anyone they believe is the beneficiary.
I don't have a law degree, but I know insurance contracts and insurance law and provide expert witness services to attorneys who need expertise like mine.
Posted: Sat Nov 24, 2012 10:01 pm Post Subject:
Thank you for your thoughtful and helpful response. A few more questions:
1. Cook v. Cook, 17 Cal. 2d 639 (1941), (the most applicable precedent I could find) held that the insured has to comply with the method provided by the policy to change a beneficiary. Given that policy rules are crucial to determining this, will insurance companies provide the policy rules to the administrator if asked? Or will those only be provided after an interpleader and then discovery? We do have a copy of the policy, but not the policy rules.
2. If the insurance company files an interpleader, does California law entitle the insurance company to attorneys fees from the proceeds of the annuity? And will a judge typically award attorneys fees to the prevailing party in the interpleader? I.e. does the losing claimant have to pay the attorneys fees of the winning claimant?
You can see the dilemma here. If the insurance company won't release all of the relevant records prior to an interpleader then we may need to go to court just so discovery can proceed and we can see which party has the strongest claim. I've had way too many experiences with financial institutions that make errors because of inexperienced clerks or clerks not being thorough to just trust them without verification--especially given the unusual facts in this case. I mean no disrespect to people in the insurance industry, I'm just talking about human error and mistakes that occur, especially when the facts related to a policy claim deviate from the norm.
Thanks again for your expertise and help!
Posted: Sun Nov 25, 2012 10:11 pm Post Subject:
We do have a copy of the policy, but not the policy rules.
On the contrary, if you have the contract, you have the rules. In the paragraph(s) under beneficiary (or changing the beneficiary), you are likely to see one of two scenarios. One is, simply, the owner writes to the insurance company and tells them who the new beneficiary is supposed to be (HOWEVER, you could see language such as "you must write to us in a form we approve" . . . which is codespeak for "using our preprinted form, you fill in the information and send it to us.") The change becomes effective, in most cases, on the date the form is signed, but language could state that the change takes effect when the company receives the form (uncommon). An insured could die in the time it takes to redo a beneficiary change on the proper form. Huge complication.
The second is a much older and, thankfully, rarer method, and is obviously somewhat more complicated. It is known as the endorsement method, and requires that the policy be returned to the insurance company to have the change endorsed onto the contract, in which case the change almost always becomes effective on the date the endorsement is applied (again, the language of the policy at this point will usually control), which complicates another issue: What happens if the insured dies in the 3-7 days this could take?
2. If the insurance company files an interpleader, does California law entitle the insurance company to attorneys fees from the proceeds of the annuity?
Insurance companies typically do not make any demands for attorneys fees in such cases. And the reason is simple: unlike contracts that are "expected" to be litigated in an adversarial situation (like landlord-tenant disputes, or credit card payments), I have yet to see a life insurance contract that discusses legal fees and the insurance company's right to demand attorney's fees in a dispute. That's a requisite, however, for such recovery. Not in the contract, not available at trial.
does the losing claimant have to pay the attorneys fees of the winning claimant?
I could be wrong on this, but as long as each party has a legitimate chance of prevailing, the Probate court simply tells each side it's responsible for its own expenses. But in a "vexatious" litigation, the prevailing (non-vexatious) party can be awarded their costs to defend the estate (or their claim).
I mean no disrespect to people in the insurance industry, I'm just talking about human error and mistakes that occur, especially when the facts related to a policy claim deviate from the norm.
No offense taken. The cases I am currently retained in are all concerned with the human errors that occurred.
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