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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 designationCall us today to discuss your case, free of charge.

Written By: Chad Boonswang
Chad G. Boonswang, Esquire is a litigation lawyer based in Philadelphia, PA. Selected as an ASLA 2014, 2015, 2016, 2017 and 2018 Top 100 Litigation Lawyer, Mr. Boonswang plays to win. As a lawyer, athlete, and scholar, he has always put in the energy, time, and commitment to be the best. After working for several prominent law firms in Philadelphia, including Montgomery McCracken Walker & Rhoads LLP, he founded his own practice in 2002.  Since then Chad has recovered tens of millions of dollars on behalf of his clients from life insurance claims and catastrophic injury cases.  Year after year, he has earned a 10.00 Superb rating on Avvo.

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