Divorce & Change of Beneficiaries Life Insurance
A surprising result that is noteworthy for divorced (or divorced) couples looking to use life insurance proceeds to help their exes and/or children:
Subject: American Family Life Assurance Company of Columbus v. Diana Parker, et.al Question: Was the mother of the deceased ex-spouse entitled to the proceeds of his life insurance policy at the time of his death, even though the ex-spouse was the named beneficiary and his mother the only contingent beneficiary?
Decision: Yes, as decided by the Plymouth Superior Court.
Diana Parker has claimed her former husband, Sean Parker, intended her and their children to be the beneficiaries of the $100,000 policy on his life, but, and corn is important, she had no admissible evidence to support her claim. Interestingly, the court looked to the parties’ 2016 separation agreement to prove the husband’s intent. Here, the judge concluded that “the separation agreement is better evidence of a lack of intention to support Diana’s position than Sean’s failure to change the beneficiary designation after the divorce.” In other words, the separation agreement did not support Diana’s case because it was silent on any agreement to keep her as the beneficiary of her life insurance held at the time of the marriage. The very fact of the omission from the Terms Agreement regarding life insurance beneficiary designations resulted in a decision in favor of Sean’s mother.
Course: For divorcing couples, there is an important lesson to be learned from this decision. Even if Sean had really wanted his wife and children to benefit from his life insurance upon his death, and as such had intentionally left Diana as the beneficiary of the policy, that, in itself, did not provide convincing enough support for Diana’s case. . Indeed, the take-home message from this judgment has more important implications than those relating to life insurance.
Divorcing couples should recognize that beneficiary designations appear in many places, including, to name a few, bank accounts, deeds and, of course, pension plans. Qualified pension plans generally require approval by the party being withdrawn as beneficiary. As such, separation agreements must state that the parties will cooperate to sign beneficiary designations and agree that the parties may change beneficiaries, unless, of course, they wish to retain each other as beneficiaries. Yet, as Diana Parker has learned, being left as beneficiary, without a specified written agreement (or specified in the separation agreement), may prove insufficient to assert the beneficiary’s claim to “the proceeds.” .
Because separation agreements often contain monetary obligations to pay alimony and/or alimony and/or property settlements, provisions for collateral assistance and/or cash payments in the event of death must be dealt with. Life insurance is perhaps the most common, and often the most affordable, way to secure your support obligations and meet cash settlement terms. But they are not the only way. Alternatively, couples can identify the assets that will be inherited by their ex-spouse in the event of their death or they can choose to require in their agreement that each party include specific testamentary provisions for the other and/or the children in the will. and the succession of each. regime in force at the date of the divorce. It is not uncommon for some couples to want to ensure that their children, and not someone else or someone else’s children, will inherit the property acquired during the marriage.
A word for the wise: Include this provision in your separation agreement. Wills can be changed at will; beneficiary designations can be challenged. The separation agreement holds.
The point is clear and simple: you have to discuss and you have to agree on what will happen in the event of death. If you want your ex-spouse and/or children to receive benefits when you die, you must say so and put it in writing in your separation agreement. Mediation provides an ideal forum to discuss not only the amount of security needed to honor your agreements, but also the means(s) of honoring your commitment. In addition, you should consider the time required to meet your obligations and any provision for future reassessment of dollars needed or if circumstances change. It is the mediator’s responsibility to ask the relevant questions and to help you as a couple analyze the best and most cost-effective ways to meet your family’s support needs while realistically recognizing your support needs. as singles.