07 Apr Does My Divorce Decree Overrule Life Insurance Beneficiary Designations in Place Prior to the Divorce?
If you have recently been divorced, it is important to remember to change the beneficiary designation on your life insurance policies to reflect the person you would prefer to become the beneficiary. Your divorce decree will not always prevent your ex-spouse from putting in a claim for benefits.
A recent case, Rice v. Webb, had an interesting ruling that impacts these situations. While the court ruled against the ex-spouse being able to claim the benefits, it wasn’t simply due to the fact that they couple was divorced. There were other circumstances which, had they not been in place, would have altered the ruling of the court.
This case involved the life insurance benefits associated with Dale Rice, who died shortly after divorcing his wife Brenda. At the time of his death, Brenda was still listed as the beneficiary on his policy and she tried to file a claim to collect the benefits. The representative for Dale’s estate filed a motion to require Brenda to renounce her claim to Dale’s life insurance benefits.
The court ruled in favor of Dale’s estate and ordered Brenda to renounce any claims to Dale’s life insurance benefits. This ruling was upheld on appeal by the state Supreme Court. The reason for the ruling was not that they were divorced, but due to certain stipulations included in the divorce agreement.
As part of the divorce agreement, Dale and Brenda had entered into a property settlement agreement which clearly stated that both parties relinquished their claims against each other’s life insurance policies, retirement accounts, stocks, and pension plans. This property settlement agreement is a contractually binding contract which supersedes the beneficiary designation on the life insurance policy.
However, the court also clearly stated that as a general rule, a divorce will not affect a beneficiary designation to a life insurance policy. Instead, the beneficiary’s claim is subject to the terms of the policy, not the status of the marital relationship. Had Dale and Brenda not included that property settlement agreement in their divorce, she would have been entitled to claim his life insurance benefits.
The rules for claiming life insurance benefits after a divorce vary from state to state. Therefore, it is important to work with an experienced divorce attorney who can guide you through this complicated process and ensure your final settlement addresses all issues regarding benefits. But regardless, the best way to avoid a situation like this is to change the beneficiary designation on your policy after your divorce.
Jeffrey M. Bloom is a family law attorney with more than 20 years of experience helping individuals in the Hackensack and Hudson County areas. He knows the complex laws which apply to divorce cases in New York and New Jersey, and he will fight aggressively to ensure your best interests are protected every step of the way.
If you are going through a divorce, please contact the Law Offices of Jeffrey M. Bloom today to schedule a consultation. Mr. Bloom serves clients in Hackensack, Ridgewood, Bergen County, and Hudson County.