by jackie7624 » Sat Feb 18, 2012 08:18 am
insurance policy. I filed a claim to the life insurance and received payment.; do I have entitlement to the monies from the life husband's life insurance policy? He was incapacaittated and a ward of the court. We were married for 59 years prior to our divorce 4 years ago. Are the life insurance monies considered a part of the estate or is it a nonprobate issue? An heir is contesting the life insurance payment to the sole beneficiary which is me. Is this a debatable issue or is there a set rule followed? I put the life insurance monies in a seperate account, what should do?
Posted: Mon Feb 20, 2012 01:53 pm Post Subject:
The life insurance itself is non-probate asset but the payout can be contested. It'll depend on the decision of the probate court. As far as the heir is concerned, is he/she a direct decedent/blood relation/dependent?
Posted: Thu Feb 23, 2012 08:49 pm Post Subject:
As far as the heir is concerned, is he/she a direct decedent/blood relation/dependent?
Makes no difference. And it is NOT a matter for the Probate Court to decide if the money has already been paid outside of probate, which it has. (This is now a potential CIVIL matter, and the insurance company has no legal liability for having paid the policy proceeds to a person it reasonably believed was entitled to them.)
The issue is settled, however, in the probate law of the state of jurisdiction. About 20 or 22 states (I don't follow probate law that closely to know the exact number) now have laws that extinguish the spouse's status as a life insurance beneficiary of their former spouse at the moment the divorce is granted. California is one of them. This does not prevent the policyowner from renaming his/her spouse as the "new" beneficiary. And the divorce court may also grant a petition to retain the former spouse as the beneficiary.
Not knowing which state is involved, or what may have been granted in a dissolution decree, there is no way to properly answer the OP's question.
But who it is that's contesting the matter? It is entirely immaterial whether they are a direct "decedent" [sic] (you cannot be paid money if you're already dead -- unless you were not a decedent before the decedent became the decedent -- OY! how much trouble is created by a missing letter!), a decendent or other blood relative, or a dependent, or someone else entirely. The issue may be raised by anyone who has a claim at probate, such as a creditor of the decedent's estate. For example, life insurance proceeds winding up in the estate are often used first to pay or reimburse someone for funeral expenses, with the remainder, if any, parceled among the creditors or beneficiaries of the estate.
Even then, however, if the money was paid to someone else outside of probate, it's not a matter for the Probate Court to decide, it is a case for Civil Court. Attorneys, hearings, expenses. Very messy, very ugly, very costly.
And if the money has been paid to a wrongful beneficiary, guess what? It's still their money. What they now have is simply a liability to another party equivalent to the insurance proceeds amount, which could be to the estate of the decedent (even after probate is closed, it would have to then be reopened), or to the legally proper beneficiary (who may have been the named contingent beneficiary in the policy. And if they don't have the money to pay the obligation . . . good luck getting it from them.
If the OP responds with information about what state is involved, a more appropriate answer may be given.
If divorce attorneys knew anything about insurance and/or probate law, they would save their clients -- or their client's heirs -- a lot of grief later on. That's why their license is only a license to "practice".
Posted: Thu Feb 23, 2012 09:20 pm Post Subject:
Not necessarily surprising, I should add, but so few attorneys have any knowledge of insurance law that they are the largest single "occupational class" of insurance complainants, life insurance policies (their own) being the most frequent source of their complaints.
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