Articles Tagged with: Interpleader claims

Power of Attorney & Life Insurance Claims Explained

Power of attorney for insurance purposes can mean any of several different things. Renowned national life insurance attorney Chad G. Boonswang explains everything you need to know about power of attorney in life insurance.

If you are having trouble getting your payout due to a power of attorney, or your life insurance claim was denied due to a power of attorney, call the experienced life insurance lawyers at Boonswang Law for help. We have helped beneficiaries nationwide get the payout they are due. Put our experience to work for you.

What Power of Attorney Is

“Power of attorney” is the term used for an estate-planning document granting authority to someone to make legal, financial, or medical decisions on your behalf. The power of attorney may be temporary or permanent.

Power of Attorney Varies from State to State

As a legal document, state law governs a power of attorney and the law varies from state to state. If you seek to draft a power of attorney, be sure to consult with a wills and estate attorney for help in drafting a document that conforms to the law in your state and is binding.

How Power of Attorney Works with Life Insurance Claims

Depending upon the laws in your state, someone with power of attorney may have the authority to do a number of things for a life insurance policyholder, including:

  • Purchasing life insurance coverage
  • Paying life insurance premiums
  • Renewing life insurance coverage
  • Life insurance coverage conversion
  • Changing life insurance beneficiary designations
  • Creating a life insurance trust

A person with power of attorney has a fiduciary duty to act in good faith and in the best interests of the person granting power of attorney. Often, the person with power of attorney is also the life insurance beneficiary, as in the case of married couples.

The power of attorney ceases upon death:  therefore, a person with power of attorney of a policyholder who dies no longer has the authority to act for that policyholder. Whomever is named as the life insurance beneficiary receives the death benefit at that point.

Power of Attorney & Beneficiary Designations

Someone with power of attorney may have the authority to change beneficiary designations on behalf of the policyholder but he or she is disallowed from naming themselves a beneficiary. They must submit their power of attorney document to the life insurance company along with the beneficiary designation change form.

Someone with limited power of attorney may not have the power to change beneficiaries even if permitted to do so under state law. If they do have the authority to change beneficiary designations, they may do so up until the policyholder’s death, unless the policyholder designated an irrevocable beneficiary such as in divorce judgments regarding life insurance and spousal support court orders regarding life insurance.

Power of Attorney Rights

The rights of a person holding power of attorney varies state to state and according to the particular document the policyholder executes. 

General power of attorney usually grants someone the authority to make all decisions on behalf of someone else. Medical power of attorney grants the authority to make all medical decisions on behalf of the policyholder, but not other decisions such as financial decisions. Durable power of attorney grants someone the right to make decisions on behalf of another if they should become incapacitated. Limited power of attorney grants someone the authority to act on behalf of another in a specific instance.   

Someone with power of attorney can only change life insurance beneficiaries if permitted to do so under state law and by the power of attorney document the policyholder executed. 

A life insurance company should not delay payment or deny payment to a named beneficiary based on power of attorney documents alone, but this does often happen.

How a Life Insurance Lawyer Helps Navigate Power of Attorney

If your life insurance claim is delayed or denied based upon power of attorney, call us for help. We have seen claims denied due to improper beneficiary changes by the person with power of attorney. Also, life insurance representatives are not as familiar with the law regarding power of attorney as they should be, and they have paid out based upon power of attorney documents rather than the named beneficiary.

Don’t take no for an answer! If someone with power of attorney caused a delay in your life insurance claim or caused your life insurance claim denial, we can help you with your life insurance claim denial appeal or your beneficiary dispute interpleader action. If your life insurance claim was denied due to lapse because the power of attorney failed to pay premiums, you may have legal recourse against them. Call us today to discuss your claim, free of charge.

Life insurance lawyer meeting with client

Does a Will Supersede a Beneficiary Designation in Your Life Insurance Policy?

Both a will and life insurance transfer assets to the people the decedent designates. That said, they work in different ways and different laws govern each. This article outlines how one affects the other and whether a will supersedes a beneficiary designation in a life insurance policy.

If you are a life insurance beneficiary having trouble getting the payout due to contrary will bequests or a life insurance beneficiary dispute, call the experienced life insurance lawyers at Boonswang Law. We have helped life insurance beneficiaries across the nation get the money their loved one intended they recieve. 

A Beneficiary Designation Overrides a Will

In short, whomever the policyholder designates as the beneficiary or beneficiaries to their life insurance death benefit gets that money regardless of who the policyholder named in their will. This is true even if a bequest in the will specifically contradicts the life insurance beneficiary designation.

In short, a will does not supersede or override a beneficiary designation. Whomever you designate as a beneficiary in your life insurance policy usually receives the death benefit.

Life Insurance Beneficiary Designation vs. a Will

What a Life Insurance Beneficiary Is

Life insurance is a contract between the policyholder and the life insurance company. In exchange for the policyholder’s premium payments, the life insurance company pays the  policyholder’s designated beneficiaries the death benefit if the policyholder dies within the coverage term. 

A policyholder may name whomever they wish as a beneficiary and may change the beneficiary designation at any time. They may even change the life insurance beneficiary just before they die. A policyholder may also name multiple primary beneficiaries as well as secondary, or contingent beneficiaries.

Life insurance is governed by state law unless it is group life insurance through an employer, which is governed by federal ERISA law. While a life insurance beneficiary designation cannot be changed after the policyholder’s death, these laws may override a beneficiary designation in a revocation-upon-divorce state. As such, a spouse or ex-spouse who is not a named beneficiary may be entitled to some or all of the death benefit in a community property state such as California or Texas.

Distributing Assets Through Will Bequests

A will is governed by state law and is only binding if it was created in compliance with those laws. In a will, someone dictates who gets their assets upon their death, whether those assets are personal belongings, real estate, bank accounts, or stocks and other investments.

Someone may make will bequests to anyone they wish, and a valid will cannot change after the decedent’s death.

Avoiding Life Insurance Beneficiary Mistakes

You’ve paid premiums all this time, now make sure the death benefit goes to the people you intend.

Name Multiple Beneficiaries

You can name multiple primary life insurance beneficiaries, or a primary life insurance beneficiary and contingent or secondary beneficiaries who receive the death benefit if the primary beneficiary predeceases you.

Keep Your Beneficiary Designations Updated

If a major life event occurs, such as marriage, a child being born, divorce, or a beneficiary has died, be sure to update your beneficiary designation accordingly. Be aware that in some cases, a divorce decree overrides a beneficiary designation, and if you live in a community property state, your life insurance policy may be a marital asset and your spouse or ex-spouse may be entitled to some or all of the death benefit.

What happens when life insurance has no beneficiary? The policy pays out to the policyholder’s estate.

Don’t Designate Your Estate as Your Beneficiary

If you designate your estate as your beneficiary, your heirs will not receive the death benefit until your estate goes through probate and “settles.” This means all of your assets are identified and all of your outstanding debts are paid. Because assets in your estate are subject to the claims of your creditors, your heirs may not receive the whole amount of the death benefit.

Do You Need Both Life Insurance & a Will?

You need life insurance if someone depends upon you financially, such as a spouse or a child with special needs, or if you have debt that must be paid upon your death, such as a mortgage or a personal guarantee on a business loan. 

You need a will if you have assets, money or otherwise, you want passed to specific people or organizations upon your death.

Most people need or want a will, and many people need or want both a will and life insurance.

Talk with a Life Insurance Lawyer About a Contested Beneficiary

When someone dies, their loved ones must locate their will and their life insurance policy, find the executor if there is a will, and find the beneficiaries if there is life insurance – all while grieving their loss. If there are conflicting life insurance beneficiary designations and will bequests, a beneficiary dispute only makes things more difficult for the bereaved.
Talk with the experienced life insurance lawyers at Boonswang Law if you find yourself in a beneficiary dispute, or if you believe you should be a designated beneficiary but were not named. We discuss your case with you free of charge, and we only take cases on a contingency basis, meaning we do not get paid unless and until you do. Call today.

Can You Sue for Life Insurance Proceeds?

Interpleader Action in Life Insurance Lawsuits

Life insurance interpleaders are the legal actions filed when there is a dispute over who should be the beneficiary and receive the death benefit. 

Have you been served with an interpleader complaint? If not, do you think you should be a life insurance beneficiary, but the policyholder did not name you? Were or are you married to the policyholder? Was the policy group life insurance from the policyholder’s employer? Did the beneficiary designation change just before the policyholder’s death?

In any of these cases, you may be a party to a beneficiary dispute and you may be entitled to a payout. Call the experienced life insurance lawyers at Boonswang law for help investigating your claim, navigating the complex web of state and federal law that applies, and preparing your case. We have worked with clients across the nation and helped them get their death benefits, and we do not get paid unless and until you do. Call now to discuss your case, free of charge.

Interpleader Definition

What is an interpleader action? An interpleader is the way a holder of property that is the subject of ownership dispute initiates a lawsuit to settle that dispute.

In life insurance, an interpleader is initiated by the life insurance company when someone disputes the beneficiary designation. The life insurance beneficiary dispute is settled in that lawsuit, and the life insurance company pays the death benefit to the prevailing party.

Common Times When an Interpleader Actions Happen

Divorce

If the policyholder was divorced, both their spouse and ex-spouse may have a claim to some or all of the death benefit even if they are not the named beneficiary on the policy.

Is This a Revocation-Upon-Divorce State?

If so, and the former spouse of the policyholder was named as the beneficiary to the policyholder’s life insurance policy, they were automatically removed from the policy under the state’s life insurance revocation-upon-divorce statute. However, they may have a valid claim to the death benefits under the following four scenarios.

Was the Life Insurance Policy a Benefit of Employment?

If group life insurance coverage was a benefit of the policyholder’s employment, then federal ERISA law applies. ERISA overrides a state’s revocation upon divorce statute, so if an ex-spouse remains the named beneficiary upon the policyholder’s death, they have a claim to the death benefit.

Is This Life Insurance Dispute in a Community Property State?

When a life insurance policy is governed by the laws of one of the nine community property states, such as California and Texas, if the policyholder paid life insurance premiums with community property (money earned during the marriage) that spouse or ex-spouse may have a valid claim to some of the death benefit. 

In any state, if life insurance is considered a marital asset, the spouse or ex-spouse almost always has a valid claim.

Was There an Irrevocable Beneficiary?

An irrevocable beneficiary designation in life insurance cannot change without the knowledge and consent of that beneficiary. If the beneficiary designation changes without that knowledge or consent, the former beneficiary has a claim to the death benefit.

Was There Court Ordered Life Insurance Coverage?

In many cases where the policyholder is a support obligor, a family law judge will often order that they maintain life insurance coverage to insure the income stream for the support obligees. If that policyholder names other parties as beneficiaries, the support obligees may have a claim to some or all of the death benefits.

A Policy Names No Beneficiary

If the beneficiary designation is invalid, as when an ex-spouse is named as the life insurance beneficiary in a revocation-upon-divorce state, other potential beneficiaries may step forward to claim the death benefits. If there is no other beneficiary named or anyone with a valid claim, the death benefits may pay out to the policyholder’s estate and go through probate.

If the primary beneficiary of a life insurance policy died before the policyholder, and the policyholder failed to name secondary or contingent beneficiaries, the death benefits may pay to the policyholder’s estate.

Potentially Fraudulent Beneficiary Changes

If a life insurance beneficiary was changed at the last minute, it may have been done fraudulently, under duress, or when the policyholder did not have the mental capacity to make that change. In that case, the formerly-named beneficiary may have grounds for a beneficiary dispute.

Interpleader Laws Vary By State

If a life insurance beneficiary dispute interpleader is filed in state court, that state’s laws govern the matter. The outcome of the interpleader may very well depend upon whether that state has a certain type of law or not.

States vary as to whether they have a revocation-upon-divorce statute, in their legal definition of fraud, and in how property is divided upon divorce. If you are involved in a life insurance interpleader filed in state court, be sure to retain a life insurance attorney with experience practicing under the law in your state.

The Federal Courts May Have Jurisdiction Over a Life Insurance Interpleaders

Federal Rules of Civil Procedure (FRCP) Rule 22 allows an interpleader action to be filed in federal court if the court has subject matter jurisdiction over the case.

What is “subject matter jurisdiction?” A federal court has subject matter jurisdiction over a case when it involves a federal question, meaning, federal law governs the case. The federal court may also have “diversity jurisdiction” if the parties involved are citizens of different states or countries, or if the amount in controversy exceeds $75,000. 

If the life insurance policy in dispute was issued through the policyholder’s employer, it is governed by federal ERISA law and a beneficiary dispute interpleader may be filed in federal court. Some life insurance policies issued to federal government workers may also be under the federal court’s jurisdiction.

Attorney’s Fees and Costs in a Life Insurance Interpleader

In many cases the court will grant the life insurance company attorney’s fees and court costs in an interpleader, which will be taken from the death benefit in dispute. These fees and costs can be significant in complex cases. An experienced life insurance lawyer helps negotiate and streamline the process to minimize that loss.

Making a Competing Claim in an Interpleader Action

If you’ve been served with a complaint for interpleader by the life insurance company, this means that the life insurance company believes you may have a claim to the death benefits in dispute. You must file an answer within the time allotted, which is 21 days if the complaint is filed in federal court. If filed in state court, that state’s laws will govern.

How a Life Insurance Lawyer Helps

Often many thousands or hundreds of thousands of dollars, even millions, are at stake in a life insurance interpleader. If you are a party to a life insurance beneficiary dispute or believe you should be a life insurance beneficiary but were not named, you may be entitled to a life-changing amount of money.
Don’t risk losing that money due to inexperience or missing important court deadlines. Our experienced life insurance lawyers have worked with clients across the nation and have gotten our clients what they deserve. Call us today to discuss your case, free of charge.

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Revocable vs Irrevocable Beneficiary

Life insurance policyholders are usually free to designate revocable beneficiaries and change beneficiaries anytime during the policy term, but there are some instances where a policyholder must designate an irrevocable beneficiary, which cannot be changed easily.

Find out the differences between revocable and irrevocable beneficiaries, when and why each type of beneficiary is appropriate, what happens if an irrevocable beneficiary dies before the policyholder.

If you are an irrevocable beneficiary but the beneficiary designation changed, or you are a beneficiary and someone claiming to be an irrevocable beneficiary is disputing the beneficiary designation, call the life insurance lawyers at Boonswang Law for help appealing your life insurance claim denial. Beneficiary disputes are notoriously difficult to win. We can help you, and your initial case consultation is free of charge!

Differences Between a Revocable & Irrevocable Beneficiary

Revocable Beneficiary of Life Insurance

When the beneficiary designation is revocable, the policyholder may change the beneficiary designation at any time without the former beneficiary’s consent or even knowledge. They may even change the life insurance beneficiary just before they die. This is by far the most common type of beneficiary.

Why You Would Designate a Revocable Beneficiary

Generally, policyholders are free to change their beneficiary designations any time during the policy term. This freedom is necessary to account for changes in relationships or if a beneficiary dies and the policyholder must select someone else.

Irrevocable Beneficiary of Life Insurance

An irrevocable beneficiary designation is one that cannot be changed by the policyholder without the beneficiary’s consent. 

If the policyholder seeks to make changes to the policy, such as adding beneficiaries or changing the percentage of the death benefit each beneficiary receives, the life insurance company must inform the irrevocable beneficiary. If the policy gets cancelled by the policyholder or for nonpayment of premiums, the life insurance company must inform the irrevocable beneficiary.

Why You Would Designate an Irrevocable Beneficiary

Policyholders creating life insurance trusts for their minor children often designate that trust as the irrevocable beneficiary of their life insurance policy, to ensure that their children receive a payout when the policyholder dies. 

Some policyholders are child support or spousal support obligors and are ordered by the court to designate their support obligees as irrevocable beneficiaries, to ensure that the obligees receive the income they need should support payments cease because the policyholder died. In these cases, often the divorce decree overrides the named beneficiary. A will does not supersede a beneficiary designation.

Is an Irrevocable Beneficiary the Primary Beneficiary?

Yes. The irrevocable beneficiary is always the primary beneficiary, meaning that the irrevocable beneficiary receives the entire death benefit first. The policyholder may name secondary or contingent beneficiaries, but these beneficiaries only receive a payout if the irrevocable beneficiary predeceases the policyholder.

Removing an Irrevocable Beneficiary

If the policyholder seeks to remove an irrevocable beneficiary, they must obtain the written consent of the irrevocable beneficiary. Usually beneficiary designation forms give the option for an irrevocable beneficiary to sign and give their consent to a change.

Which Type of Beneficiary is Right for You?

Usually, policyholders opt to designate revocable beneficiaries to have the freedom to redesignate beneficiaries as life and relationships change. However, if you have minor children or are a support obligor, you may want to or be forced to name irrevocable beneficiaries.

What Happens if an Irrevocable Beneficiary Dies Before a Policyholder?

If an irrevocable beneficiary predeceases the policyholder, and there are no other irrevocable beneficiaries, the policyholder is free to designate a beneficiary of their choice. In the alternative, the payout goes to any secondary or contingent beneficiaries the policyholder names. If there are no life insurance beneficiaries, the death benefit pays to the policyholder’s estate.

How a Life Insurance Lawyer Helps

If you are the beneficiary of a life insurance policy and someone claims to be the irrevocable beneficiary, or if you are the irrevocable beneficiary and someone else was named, call us. We have helped beneficiary clients across the nation get the payout their loved one intended. Let us help you too. Call us today to discuss your case – free of charge!

Divorce Decree

Does a Divorce Decree Override a Named Beneficiary?

Sometimes. It depends upon what state and federal law controls the life insurance policy and whether the policyholder was married in a community property state or not.

Learn from the nation’s top life insurance lawyers how divorce may affect a life insurance beneficiary designation. If your spouse or ex spouse had life insurance and died and you believe you should be the beneficiary, call us. We have helped clients across the country get the life insurance payout they are entitled to.

Named Beneficiaries in Life Insurance

Under most circumstances, a named beneficiary receives the life insurance payout even if the policyholder’s will says otherwise. However, certain legal situations may change that. This situations include:

  • If the insured was married in a community property state
  • If the insured failed to change the beneficiary designation after divorce in a revocation upon divorce state
  • If the insured changed an irrevocable beneficiary designation
  • If the insured named someone other than the beneficiary designated by court order

If any of these apply to your spouse or ex spouse and you think you should be their life insurance beneficiary but are not, call us – we may be able to help you.

Who Becomes the Beneficiary of a Life Insurance Policy After a Divorce

The answer to this is, it depends.

Many states have revocation-upon-divorce laws that eliminate an ex spouse as a policyholder’s beneficiary automatically upon divorce. This means that a policyholder must designate someone else as the beneficiary. Otherwise there will be no named beneficiary if the policyholder dies, the death benefits may pay to the estate.

*Note that a will does not supersede a beneficiary designation. If the policyholder wishes to change beneficiaries, they must do so following the procedures provided by the life insurance company.

Can a Divorce Decree Override a Named Beneficiary?

Yes. If the policyholder was married in a community property state and got divorced, the ex spouse may be entitled to some of the death benefit regardless of who is the named beneficiary.

Also, if the policyholder is a child support or spousal support obligor, is under court order to name their support obligees as life insurance beneficiaries, and fails to do so, those support obligees may be entitled to the death benefit regardless of who is the named beneficiary.

In either of these cases, the people who believe they should be the named beneficiaries but are not must file an interpleader and contest the beneficiary designation. Beneficiary disputes are notoriously difficult to win. Call us for help if you need to dispute a beneficiary designation.

States that Revoke a Person’s Beneficiary Rights Following Divorce

As of this writing, the following states have some form of revocation-upon-divorce statute that automatically removes an ex spouse as life insurance beneficiary after divorce:

  • Alabama
  • Alaska
  • Arizona
  • Colorado
  • Florida
  • Hawaii
  • Idaho
  • Iowa
  • Massachusetts
  • Michigan
  • Minnesota
  • Montana
  • Nevada
  • New Jersey
  • New Mexico
  • New York
  • North Dakota
  • Ohio
  • Pennsylvania
  • South Carolina
  • South Dakota
  • Texas
  • Utah
  • Virginia
  • Washington
  • Wisconsin

A few states like California do not have revocation-upon-divorce statutes.

How Federal ERISA Law Treats Life Insurance and Divorce

Bear in mind that if the policyholder has group life insurance through their employer, that policy is governed by ERISA which supersedes state law. Under ERISA, a named beneficiary cannot be changed by the act of divorce. Therefore, if a policyholder lives in a revocation-upon-divorce state, names their spouse as their life insurance beneficiary, and then gets divorced, their ex spouse remains as their beneficiary.

If a policyholder does not wish their ex spouse to benefit from their death, they must update their group life insurance beneficiary themselves as any state revocation-upon-divorce law has no effect.

Re-Designating a Beneficiary Following Your Divorce

Many revocation-upon-divorce states specify a procedure to redesignate an ex-spouse as a life insurance beneficiary following divorce. 

Redesignation is common when the policyholder is a child support obligor or a spousal support obligor and is under court order to name their obligees as life insurance beneficiaries. Beneficiary redesignation ensures that the obligees’ income stream continues upon the policyholder’s death.

Rights to Life Insurance of Divorced Spouses

Someone may be entitled to a portion of their ex spouse’s death benefits even if they are not named as beneficiaries on the life insurance policy. 

In community property states, income earned during the marriage qualifies as community property – meaning, that income belongs to both spouses equally. If the policyholder paid some or all of their life insurance premiums with that income, their ex spouse may get a prorated portion of the life insurance payout even if someone else is the designated beneficiary.

Talk with an Experienced Life Insurance Lawyer

We have experience in every state in the nation, as well as with working under federal ERISA law, helping life insurance beneficiaries and those who are otherwise entitled to some of the death benefits get their due. Let us help you too with either an appeal of your life insurance claim denial or an interpleader action to challenge the beneficiary designation. Call us today to discuss your case, free of charge.

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Life Insurance Beneficiary Rules in NY

How Does Life Insurance Work in New York State?

If you are the owner or a beneficiary of a life insurance policy issued in New York State, this guide will provide you with important information about how life insurance works there. While there are some federal laws governing life insurance nationwide, every state treats insurance laws differently, and in New York, there are things you need to know whether you are the insured or a life insurance beneficiary.

For well over two decades, the experienced life insurance attorneys at Boonswang Law have helped beneficiaries in cases where life insurance is not paying out. If you have questions about life insurance and you are a resident of New York State, contact us today to speak with an attorney. Your initial consultation is free of charge, and we don’t get paid unless we win!

Who Can Be a Life Insurance Beneficiary in New York?

People you are related to, people you are not related to, trusts, organizations, businesses, charities, your estate… you can designate any, some, or all of these as your life insurance beneficiaries in New York State. 

You can designate one or more people or entities and also designate the percentage of death benefits that will be allocated to each. You can also designate “secondary” or “contingent” beneficiaries that will receive the death benefit if the primary beneficiaries are not available.

Minor Children as Beneficiaries of Life Insurance in New York

Children under the age of 18 should not be named as beneficiaries in New York State. If they are, the court may appoint a guardian to receive and manage the funds in their name until they reach the age of majority. Technically, a child above the age of fourteen years and six months can receive death benefits, but counting on this technicality opens the door to possible dispute and litigation.

If an insured wants minor children to receive life insurance proceeds, he or she should create a trust for the benefit of those children and name the trust as beneficiary. In the alternative, the insured can name an adult custodian of the funds as beneficiary.

How Life Insurance Pays Death Benefits in New York

First, the insurance company will try to locate and pay the insured’s named beneficiary or beneficiaries. 

If the named beneficiary has died or the beneficiary designation is invalid for any reason, the insurance company will try to locate and pay the contingent or secondary beneficiary or beneficiaries

If the insurance company cannot locate either the named beneficiary or the contingent beneficiary, it will usually pay the death benefits to the estate of the insured. This is commonly provided for in the policy itself and not a matter of state law. The insurance proceeds are then subject to the will of the insured and are distributed among the heirs accordingly. 

In the case where there is no will, the insured has died “intestate” and the insurance proceeds will be distributed according to New York’s intestacy laws, which can be found here.

Will a Life Insurance Beneficiary Designation Naming a Spouse be Changed by Divorce in New York?

Yes.If the insured divorces the beneficiary of his or her policy, that beneficiary designation is automatically invalid under the New York revocation on divorce statute:

EPTL 5-1.4(a)(1) provides: 

Except as provided by the express terms of a governing instrument, a divorce .. revokes any revocable (1) disposition or appointment of property made by a divorced individual to, or for the benefit of, the former spouse, including, but not limited to, a disposition or appointment by will, by security registration in beneficiary form (TOD), by beneficiary designation in a life insurance policy …. 

If the insured wishes to retain the beneficiary designation after divorcee, he or she must reaffirm the designation of the ex-spouse as beneficiary after the divorce decree is entered. This is often desired the insured is paying spousal support or child support and is complying with family court orders to maintain life insurance to guarantee that income stream.  

ERISA Life Insurance Beneficiary Designation Rules and Ex-Spouse in New York

If a life insurance policy is acquired as a benefit of employment, it is likely governed by the Employee Retirement Income Security Act of 1974, known as “ERISA.”  In a life insurance claim dispute governed by ERISA, this federal law will supersede New York state law.

Under ERISA, the life insurance beneficiary designation is strictly observed regardless of whether the insured divorced the beneficiary or not. In other words, despite New York state law revoking an ex-spouse’s beneficiary designation, if an insured fails to change the named beneficiary after divorce, the ex-spouse will receive the death benefit. 

The bottom line is, if an insured has a policy through work that is governed by ERISA, and does not want his or her ex-spouse to receive the death benefit, he or she must change the beneficiary designation before they die.

Can You Contest a Life Insurance Beneficiary Designation in New York?

Yes. Here are two of the most common circumstances that prompt life insurance beneficiary disputes in New York State:

ATTEMPTED BENEFICIARY CHANGE BY THE INSURED

If the insured tried to change the beneficiary of his or her policy but did not do so correctly or completely, a court in New York will look at extrinsic evidence to determine what the intent of the insured was at the time he or she tried to change the beneficiary designation.

FRAUDULENT BENEFICIARY CHANGE 

If a formerly-named beneficiary alleges that the insured was coerced of forced to change a beneficiary designation, a New York court will look at evidence and testimony about the insured’s health, state of mind, and the role of the new beneficiary in the life of the insured at the time the beneficiary change took place.

What Happens when the Insured Designates Someone as Beneficiary on the Policy, and Names Someone Else as Beneficiary in his Will?

In New York, the terms of the policy will control the outcome of this dispute, rather than New York State law or federal law. You and your attorney will have to comb through the provisions of the policy documents to determine the answer to this question, as it will vary policy-to-policy.

I am the beneficiary of a New York life insurance policy and someone is contesting the beneficiary designation, what do I do?

You should defend for beneficiary designation by securing the representation of an experienced New York life insurance beneficiary attorney. Contact us to schedule an evaluation of your case.

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Life Insurance Beneficiary Laws in Florida: A Guide

How Does Life Insurance Work in Florida?

If you are the owner or a beneficiary of a life insurance policy issued in the State of Florida, this guide will provide you with important information about how life insurance works there. While there are some federal laws governing life insurance nationwide, every state has its own unique laws regarding life insurance policies issued there and Florida is no different.

The Boonswang Law firm has assisted life insurance beneficiaries to obtain the benefits they are owed for over two decades. If you have questions about life insurance and you are a  Florida resident, contact us today to speak with an attorney who concentrates in this area of law.

Who Can Be a Life Insurance Beneficiary in Florida?

People, organizations, businesses, your estate… all of these can be designated a life insurance beneficiary in Florida. Minor children cannot be beneficiaries, and if they are named as beneficiaries, the court will appoint a guardian to receive and manage the funds in their name until they reach the age of majority.

An insured wishing minor children to receive life insurance proceeds might instead create a trust for their benefit and name the trust as beneficiary, or name an adult custodian of the funds as beneficiary.

How Life Insurance Pays Death Benefits in Florida

In Florida, the insurance company will first try to locate and pay the named beneficiary on the policy. 

If the named beneficiary has died or the designation is invalid for any reason, the insurance company will try to locate the alternate beneficiary. The alternate beneficiary is also known as a “contingent beneficiary,” with the contingency being the death of the named beneficiary.

If neither the named beneficiary nor the alternate beneficiary is available, the insurance company can pay the death benefits to the estate of the insured if this is provided for in the policy itself. The proceeds are then distributed according to the instructions in the will of the insured. 

If the insured did not have a will, he or she is said to have died “intestate.” In this case, the insured’s estate, including the death benefit, will be distributed to the insured’s heirs according to Florida’s intestate succession laws, which can be found here.

Will a Life Insurance Beneficiary Designation Naming a Spouse be Changed by Divorce in Florida?

YES. This is extremely important. After divorce the designation of an ex-spouse as beneficiary of a life insurance policy is automatically invalid by operation of Florida state law. 

If the parties divorcing wish to retain the beneficiary designation, the insured must reaffirm the designation of the ex-spouse as beneficiary following the divorce. This often happens when the insured is paying spousal support or child support and the court orders the insured to maintain life insurance to guarantee that income stream.  

ERISA Life Insurance Beneficiary Designation Rules and Ex-Spouse

If a life insurance policy is acquired as a benefit of employment, it is likely governed by the Employee Retirement Income Security Act of 1974, a federal law commonly referred to as “ERISA.”  In a life insurance claim dispute governed by ERISA, federal law will supersede Florida state law.

Under ERISA, the life insurance beneficiary designation is strictly observed. So despite Florida law invalidating an ex-spouse’s beneficiary designation, if an insured fails to change the named beneficiary after divorce, the ex-spouse will receive the death benefit under ERISA. If an insured has a policy governed by ERISA and does not want his or her ex-spouse to receive the death benefit, he or she must change the beneficiary designation before they die.

Can You Contest a Life Insurance Beneficiary in Florida?

YES. Here are two of the most common reasons why there are life insurance beneficiary disputes:

INEFFECTIVE BENEFICIARY CHANGE BY THE INSURED

If the insured attempted to change the beneficiary but did not do so correctly, a Florida court will look at extrinsic evidence to determine what the intent of the insured was at the time that she made efforts to change the beneficiary designation.

BENEFICIARY FRAUD 

If a formerly-named beneficiary alleges that the insured was coerced to change a beneficiary designation, a Florida court will look at evidence and testimony about the insured’s health, state of mind, and the role of the new beneficiary in the life of the insured at the time the beneficiary change took place.

What Happens when the Insured Designates Someone as Beneficiary on the Policy, and Names Someone Else as Beneficiary in his WIll?

If the will of the insured designates one party as beneficiary of his life insurance policy, but the policy itself names another party as beneficiary, the policy will control. You cannot override a beneficiary designation with contrary instructions in your will in Florida.

I am the beneficiary of a Florida life insurance policy and someone is contesting the beneficiary designation, what do I do?

Unfortunately, disputes do arise over who is the rightful beneficiary of a life insurance policy in Florida. You should defend, and you will need an experienced life insurance beneficiary attorney to fight back. Contact a life insurance expert to evaluate your case. 

Your Guide to Life Insurance Beneficiary Disputes

What happens when multiple people claim they each are entitled to life insurance benefits after the death of the insured? How does an insurance company determine who is entitled to the benefits? If you believe you are the rightful beneficiary to a life insurance policy, you will likely need the expertise of a trusted life insurance attorney to help you file an interpleader action. Keep reading to find out about the different types of life insurance disputes.

Types of Life Insurance Disputes

Claims by former spouses

A common beneficiary dispute arises when an ex-spouse remains the named beneficiary on a life insurance policy. This may occur if the policyholder neglects to change the beneficiary after a divorce, or if the ex-spouse’s designation as beneficiary was part of the divorce decree. Depending on the type of policy and the state in which the policy was issued, an ex-spouse may not be entitled to the benefits despite being named beneficiary.

Insurance Policies Governed by State Law

1. Revocation on Divorce statues

Life insurance beneficiary rules after a divorce vary by state. About half of all states maintain a “revocation-on-divorce” statute, which provides that divorce effectively removes an ex-spouse as beneficiary. These statutes may be overridden if:

  • the insured re-designates their ex-spouse as beneficiary, or;
  • if the divorce decree states that an ex-spouse will remain the beneficiary.

This occurs because life insurance is occasionally used as a form of alimony or as security for any children of the marriage.

We recently got our ex-wife beneficiary client paid on her claim in Texas, a revocation-on-divorce state, when we were able to show that the insured explicitly re-designated her as beneficiary following the entrance of the divorce decree.

2. Community Property States

If no revocation-on-divorce statue exists in your jurisdiction, a current spouse may still recover if the policy was issued in a community property state. A former spouse might also recover under certain circumstances!

In community property states, all property acquired during the marriage is owned equally by both spouses – including life insurance. Under a term life policy, a current spouse is often entitled to one-half of the death benefit because the entire policy is considered community property. Under a whole life policy, the current spouse is entitled to benefits according to the percentage of premiums paid with community funds.

If the policy premiums were paid with community funds with a current or former spouse, there is an argument that he or she is entitled to half of the death benefit even if not named as beneficiary. For example, in a case where the insured named his son as sole beneficiary, we got our client paid half of the death benefit by arguing that she was with the insured for 12 years, lived with him for eight years, and was married to him for the last four years prior to his death, and premiums were paid from their joint account. Keep in mind that while this is a real-life situation, we cannot guarantee the same results in any other matter.

Policies under Federal ERISA Law

If the insured had a policy through their employer, the policy is governed by the federal Employee Retirement and Income Security Act of 1974 (ERISA) which states that the most recent validly-named beneficiary is the rightful claimant. This means that under ERISA, an ex-spouse who remains the designated beneficiary on a policy will receive the proceeds, regardless of the insured’s intent. However, if the insured tried to change their beneficiary designation at any point, other individuals may still have a claim on the policy.

If the insured’s policy originated under their employer and was converted to an individual policy, the rules governing beneficiary disputes vary by jurisdiction. Also, ERISA trumps or supercedes state law, so where there is a conflict ERISA will control. This happened in a case where we were able to get an ex-spouse paid in full on her claim in a revocation-on-divorce state, because ERISA controlled.

If you believe you should be a beneficiary of a policy governed by ERISA, contact a beneficiary attorney at the Boonswang Law Firm to find out if you have a claim.

Life Insurance Fraud

If the insured changed beneficiaries when under duress or when incompetent to do so, or if someone forged their signature on life insurance to change the beneficiary, this sparks a beneficiary dispute.

Competing claims by siblings, step-siblings, or others

Another common beneficiary dispute occurs when the insured has children from multiple marriages, or marries an individual with children from another marriage. Often, an insured parent may intend to make all his or her children beneficiaries, but neglects to add children to the policy as time passes. Do these unnamed children have a claim? Probably! Also, where an insured designated “all children of the insured” rather than naming them each, an adopted child (our client) was equally entitled to the death benefit.

State laws vary, but most states will only allow a validly named beneficiary to collect life insurance proceeds. Someone other than the named beneficiary could have a claim, but only if there is clear evidence of the insured’s intention to name another beneficiary. Evidence of the insured’s intention may exist if, for example, the insured completed and mailed a beneficiary change form, but forgot to sign it. Or, if the insured completed a beneficiary change form and mailed it, and having never received notice that it was completed incorrectly, assumed it was in force.  This happened in a recent case where we were able to get his intended beneficiary paid in full.

How do insurance companies handle competing claims?

When different individuals or parties claim the right to receive the same benefits, how does an insurance company determine who is entitled to the proceeds?

If more than one party claims to be the legal beneficiary of a policy, a life insurance company will likely bring an interpleader action. This means that an insurance company will deposit the policy benefits into an account controlled by the court. If multiple parties make claims, you will need a life insurance lawyer because interpleader actions are legal actions that the court decides. Once multiple claims have been made, an insurance company will not likely make a determination about beneficiary disputes.

Interpleader actions can be resolved through  the following ways:

  • litigation (the parties will make their cases and the court will decide who is the rightful beneficiary), or;
  • settlement (the parties agree upon the amounts to which they are each entitled with the help of their attorney).

After the dispute is resolved, the life insurance benefits are distributed according to what the court or the parties decided.

How to respond to life insurance disputes

The best way to avoid a beneficiary dispute is to ensure that you and your loved ones regularly review your life insurance policy and your beneficiary designations. You should keep in touch with your issuing agent and establish a plan to periodically review your policy. Additionally, you should be sure to review your policies after important events, such as marriages, the birth of a child, divorces, or job changes.

If you are currently experiencing a beneficiary dispute, you will need a trusted life insurance lawyer. Beneficiary disputes are almost always a legal matter so it is important that you receive legal assistance as soon as possible from a lawyer for life insurance claims. Top-rated life insurance attorney Chad Boonswang and his associates have more than 25 years of experience achieving successful resolutions in beneficiary disputes. Contact the Boonswang Law Firm to learn about your potential for recovery.

Boonswang Law

Can an interpleader take money from the winner of a contested insurance policy to pay court costs?

Ideally, the death benefit on a life insurance policy is paid directly from the insurance company to the named beneficiary or beneficiaries. However, disputes frequently arise over who is rightfully entitled to the death benefit. One claimant might allege that the other claimant changed the insured’s beneficiary designation through forged paperwork, or that the named beneficiary is invalid because he or she was responsible for the insured’s death. When multiple parties claim the same death benefit, an insurance company may choose to file an interpleader action.

Defining interpleader

“Interpleader” refers to a specific type of lawsuit. Instead of a single claimant suing a single stakeholder, interpleader involves multiple claimants suing one another for rights to the stakeholder’s property. For instance, let’s say that John owned a house. In his will, John dedicated the property to his daughter, Kate, but John also verbally agreed to give the house to his son, Ben. After John dies, the executor of his estate doesn’t know to whom he should give the house. The executor then files an interpleader action, such that Kate and Ben are now litigating against one another for rights to John’s house. This allows the executor to avoid any liability resulting from paying the wrong person.

Similarly, life insurance companies may encounter multiple parties who all claim the same death benefit. The company may choose to file an interpleader action, such that the claimants are fighting against one another instead of against the company. The company is acknowledging it owes the benefit to someone but requests that the court determine the correct party.

Court costs & attorney fees

Generally speaking, when a “neutral stakeholder” such as a life insurance company asks for reimbursement of any court/attorney fees, the court will grant reimbursement by taking from the winning claimant’s death benefit. If a winning interpleader claimant were to receive a $10,000 death benefit, the insurance company (as neutral stakeholder) could subtract $500 in attorney and court fees, leaving $9,500 to the winning claimant. These fees are usually insignificant, as the stakeholder is only filing, drafting, and serving a few documents. However, in a more complex case, the costs may be substantial.

Dealing with competing claims for a life insurance policy’s death benefit can be a complex, heavily litigated process. If your claim has been wrongfully denied, don’t hesitate to contact an experienced life insurance lawyer.

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