I’m the beneficiary on my ex-husband’s $250,000 life insurance. He’s now threatening to change it. Is he in breach of our divorce decree?
Dear Quentin,
My ex-husband has a $250,000 life insurance policy. I am 50 years old and only have $45,000. When we divorced, I was assured that I would be the named beneficiary so I could have security as I grew older and pass this on to my children, but he informed my child that he could no longer afford the $200. Monthly installments, which they will have to pay. He has also long threatened to change the beneficiary designation. Can he do that?
This is his way of trying to go back on the promise and commitment he made when we divorced. I understood that the divorce agreement stipulated that I should remain a beneficiary of his life insurance policy – that's what I remember. I hoped, but didn't quite trust, that he would follow through. He was never faithful in our marriage, took pride in annoying the people he was with and not paying his bills. Once a cheater always a cheater.
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Ex-wife and mother
Dear ex-wife,
The answer, my friend, must be in your divorce decision.
“Assuming there is a life insurance provision in the divorce decree, it should make it clear who will pay the premiums.” According to the MassMutual website. “It is important to set clear terms and responsibilities because they may harm your beneficiaries if premiums are not paid. If you add your ex-spouse to the policy, you can request copies of billing records and lapse notices.
People usually add a clause stating that the beneficiary cannot be changed without their consent. MassMutual adds that at the time of your divorce, you and your attorney should clearly identify who owns the policy. “This is important because the policy owner has the ability to change beneficiaries, rates, and insurability, which can help protect your income. It is also possible to sign over ownership of an existing insurance policy prior to divorce proceedings.
You did not mention what type of life insurance policy your husband carries. A life policy lasts for 10 to 30 years, and if your ex-spouse outlives that period, the policy will expire and your beneficiaries will not receive any money. On the other hand, a whole life policy has a cash value and, for this reason, costs more than a whole life policy. Once a whole life policy builds up significant cash value, the insured person can cash it out or borrow against it.
It is not unusual for a spouse to fail to comply with a divorce decree related to a life insurance policy. The spouse can cancel the policy, replace it, or even change the beneficiaries. There are many issues here. First, it is your ex-spouse's responsibility to pay for the life insurance policy and not make it the responsibility of his children. It's unfortunate, unfair, and petty that it puts them in the middle of your dispute.
in Hillman v. MariettaThe U.S. Supreme Court has ruled in favor of a 66-year-old man's ex-wife, not his widow, as the beneficiary of a life insurance policy worth more than $124,000. In this case, he may not have wanted his ex-wife, whom he divorced ten years before his death, to claim his life insurance policy. But the divorce decision was not important, because the policy submitted to the insurance company bore the name of his ex-wife.
State law varies
If your divorce decree is not clear as to who is the beneficiary of your ex-spouse's life insurance policy, the outcome may depend on your state's laws. Can a divorce decree cancel a life insurance policy? “Yes. If the policyholder is married in a community property state and gets divorced, the ex-spouse may be entitled to some of the death benefits regardless of who the named beneficiary is, according to Boonswang Law In Philadelphia.
Nearly half of U.S. states — including Florida, Pennsylvania, New Jersey, New York, Texas, Massachusetts and Colorado — have some form of divorce annulment law that automatically removes an ex-spouse as a beneficiary of life insurance after divorce, the law firm adds. Meanwhile, California law excludes life insurance policies from automatic cancellation laws upon divorce.
Your ex-spouse life insurance beneficiary in california will pass muster, according to Karina Castaneda, an attorney in Manhattan Beach, California, “unless the property settlement or divorce decree specifically provides for an adverse outcome; The policyholder changes the beneficiary designation; The insurance contract cancels the designation of the beneficiary upon divorce; (or) The ex-spouse legally relinquishes his or her interest in politics.
We'd all like to think that ex-spouses will keep their word and perhaps conduct themselves in a more honorable manner than they did during the marriage, whether it's child support, alimony, life insurance policies, or retirement accounts. But divorce doesn't necessarily change people. In many cases, it can provide an opportunity for the ex-spouse to once again exercise all his power to cause disruption in his ex-partner's life.
Your divorce attorney should be able to advise you on what action you can take based on the laws in your state and the exact wording of your divorce decree. Beneficiary disputes, as the above case indicates, can be very complex and difficult to win. It can also, if they end up going to a higher court and waiting years, be very expensive. Your legal advisor will be able to tell you if it is worth it.
Stay strong and stay focused — and don't let your ex get under your skin.
Previous columns by Quentin Futrell:
