Articles Tagged with: Interpleader claims
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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. 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.

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.

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.

 

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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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