by christina_125 » Sun Apr 18, 2010 12:00 pm
I'm from Ohio...we have a situation where my uncle passed due to an accidental fall down his stairs at the age of 56. He broke his neck in the fall and was killed instantly. At the time he was unmarried, had no children and left the beneficiary portion of his AD&D policy with his employer blank when he took his ex-wife off the spousal AD&D portion in 2002. Obviously his HR Department failed to validate the documentation upon submission and accepted it that way. Now they are telling us that they are trying to determine his intentions because his last named beneficiary was his ex-wife (noted on the beneficiary form prior to their divorce and dated prior to the one submitted without a beneficiary on it).
Two other points in this case, the AD&D summary plan description cites confomity to law in payment terms and after less than 10 years of marriage and no children, the ex-wife signed a dissolusion of marriage giving up rights to any retirement or employer paid accounts (which they have a copy of on file).
Can someone explain to me why this is not just defaulting to his estate? How can this company look at a previous beneficiary form when new ones are supposed to supercede anything previously written and why would it take over 6 months to make this decision?
Christina
Two other points in this case, the AD&D summary plan description cites confomity to law in payment terms and after less than 10 years of marriage and no children, the ex-wife signed a dissolusion of marriage giving up rights to any retirement or employer paid accounts (which they have a copy of on file).
Can someone explain to me why this is not just defaulting to his estate? How can this company look at a previous beneficiary form when new ones are supposed to supercede anything previously written and why would it take over 6 months to make this decision?
Christina
Posted: Sun Apr 18, 2010 03:51 pm Post Subject:
If the decedent executed a change of beneficiary from the ex-wife to "blank" (AKA: my estate), then the policy proceeds would, indeed, inure to the decedent's estate.
But if this is not actually the case, that no change of beneficiary was ever executed, the ex-wife is probably still the designated beneficiary as far as the insurer is concerned.
If the decedent asked HR for assistance in taking the ex-wife off as beneficiary, and HR failed to understand the importance of the request, or failed to adequately inform the decedent of his responsibilities, the company could be liable to the estate for an amount equal to the death proceeds, if they are paid to any other beneficiary.
"Conformity to state law" has nothing to do with civil court orders. It has everything to do with the regulation of insurance at the state level. State law does not compel an insurer to remove an ex-spouse from a life insurance policy as beneficiary simply because a divorce occurs. "Employer-paid accounts" refers not to life insurance proceeds, but to retirement plan/deferred compensation plan assets, rights to which are governed under federal law.
Posted: Sun Apr 18, 2010 05:29 pm Post Subject:
Thank you for the feedback. Your comment about the state law is confusing to me though. Our estate attorney has pointed out a section of the Ohio Revised Code that speaks specifically to ex-spouses lack of rights after divorce.
Christina
Posted: Mon Apr 19, 2010 02:34 am Post Subject:
The issue is this. Despite what some document might say the ex wife is out of the picture with respect to assets, there's a contract that stipulates that if person A (your uncle) dies wile this policy is in force make a payment for X amount to person B (ex wife).
As Max has pointed out, if it was the intent of your uncle to make this change, and the HR department at his employer failed to process this request with the insurance company, the could be in some trouble.
The insurance company is simply going to follow what they have on record as the instructions to pay. They are legally required to do so.
This is probably the most common question asked on this forum, and serves again--as it does every time--as a great public service announcement, to plead with everyone who happens upon this to ensure that there documents and estate plans are in order.
Posted: Mon Apr 19, 2010 07:12 pm Post Subject:
Our estate attorney has pointed out a section of the Ohio Revised Code that speaks specifically to ex-spouses lack of rights after divorce.
This state law reference has to do with CIVIL law. The state of Ohio is free to impose duties and obligations or exclusions upon husbands and wives who complete the divorce process. Those persons must abide by those laws and judges' rulings as they may apply.
When you speak of an insurance contract's language that refers to "conformity with state law", that is a reference not to civil law but the law of CONTRACTS as they may be impacted by changes in insurance law underlying the contract.
An example of this would be a (hypothetical) change to the Insurance Code that requires life insurance policies to have a minimum death benefit of $15,000. All policies with less than that amount of death benefit would have to be reprinted and delivered to their owners if it were not for the paragraph that states, "This policy may be amended as needed to conform with state laws." It would allow the insurer to simply pay a beneficiary $15,000 instead of the $10,000 they were expecting, without necessarily having to notify any policyholder of the change. (For the record, whenever such major changes are made to the Insurance Code, the enabling law or regulations usually requires the insurers to notify insureds of the change in writing.)
Auto policies have similar language. You might drive with a minimum liability coverage policy. When you cross state lines into Kentucky or Pennsylvania, for example, to avoid being in violation of those states' vehicle codes, your policy limits would automatically adjust up to the minimum liability requirement (if, indeed it was higher) required by law in that state.
But sections of the CIVIL CODE have no impact on what insurers are required to do under the INSURANCE CODE unless parallel sections have been included (which does occur when the legislature recognizes the need) in both CODES.
The CIVIL CODE could require a man to maintain his ex-wife as the beneficiary on his life insurance policy following a divorce, but the INSURANCE CODE normally would have nothing to say about that "private" matter.
If the husband failed to follow the court's order, the ex-wife would have a cause of action against the husband, but not the insurance company. If the husband requested the insurance company to make a change in beneficiary and the insurance company did not make the change, then there might be a cause of action against the insurer. Or, as I stated above, if the employer negligently failed to do something, they could be liable for an amount equal to the death proceeds.
In general, little if anything can stand in the way of life insurance proceeds between the insurance company and the beneficiary. Including big mouth ex-wives and their attorneys. The disposition of estate assets is what your estate/probate attorney is probably referring to when he speaks of the rights of an ex-spouse following a divorce.
[[ Your estate/probate attorney may actually have little or no understanding of insurance law, as is sometimes the case, and could easily fill your head with misinformation. Some of us who have worked in the insurance industry for 5 or 10 or 20 or more years often understand insurance law better than some attorneys. ]]
After rereading your post and my initial response, a distinct problem you may have is the fact that the successive beneficiary designation was left blank. That could possibly be interpreted to mean -- "I don't remember what I previously wrote, so leave it alone" -- or it could mean, as it normally should -- "I don't know who I want as my beneficiary, so wait until you hear from me again" -- in which case, silence to the point of death would be interpreted as "MY ESTATE."
** But you must also understand /'that latter interpretation comes from the PROBATE CODE, not the insurance code.**
A life policy's language is usually more generic, something like, "In the event the named primary beneficiary predeceases the insured, the policy proceeds will be paid to the contingent beneficiary of record. If there is no contingent beneficiary, the proceeds will be paid to the owner, or to the owner's estate."
Since most life insurance is owned by the insured, "the owner's estate" is usually synonymous with "the decedent's estate". If the money is paid to the estate, it is up for grabs among all unsecured creditors (which could very well include an ex-spouse) long before the heirs would be entitled to any of it.
As BNTRS commented above,
This is probably the most common question asked on this forum, and serves again--as it does every time--as a great public service announcement, to plead with everyone who happens upon this to ensure that there documents and estate plans are in order.
Dying without a will or with a blank beneficiary designation simply leaves everything up to some judge who could probably care less on some days.
Posted: Mon Apr 19, 2010 07:38 pm Post Subject:
How can this company look at a previous beneficiary form when new ones are supposed to supercede anything previously written and why would it take over 6 months to make this decision?
While 6 months is an unusually long time (interest is accruing on the death benefit), the insurance company does not want to create a bigger problem by paying money to the wrong party -- once paid, they have almost no liability.
Unfortunately, because you have retained an attorney, your state Dept of Insurance is not going to intervene on your behalf with the insurer. They are still interested in hearing about an insurer that takes too long to pay a claim. So you might want to contact them and let them know what's (not) going on.
Posted: Wed Apr 28, 2010 07:39 pm Post Subject: additional question
So does the Administratrix (no will either) have the right to a copy of the beneficiary form? Not that having it will make a difference about how payment is ultimately decided; but does the law speak to the executor/administrator/executrix/administratrix having the right to see the form or the right to request a copy of it be provided to have on file with all the estate paperwork? Can this request be denied?
Posted: Thu Apr 29, 2010 12:41 am Post Subject:
You raise an interesting question. If the matter is being conducted through the probate court, there may very well be a right to "discovery" -- you'll have to research probate court procedure in your state (or contact the court clerk). The probate court's mandate is to locate all the estate assets, order their liquidation when necessary, so that claims against the estate may be settled first, and remaining divisible assets/proceeds shared by the heirs.
If allowed, it requires a formal request for discovery be sent to the insurance company (you would want to direct that request to the "Office of General Counsel"). If they fail to respond to the formal request, then you would have to file a motion for discovery through the court.
They have to respond to a motion filing. Failure to respond subjects the to civil fines.
Give it a try and let us know what happens.
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