The intent of a divorce is for spouses to completely separate from each other. Not only does this mean the spouses’ relationship is over, but also that the spouses’ property will be completely separated and divided between them. The former spouses will divide everything from clothing to real estate, as well as life insurance policies. But what happens if a former spouse stays on the other former spouse’s life insurance policy as a beneficiary?
In a typical situation, the former spouses will have been represented by attorneys in the divorce and those attorneys would have done a wonderful job of including and dividing all of the former spouses’ property in the divorce decree or final divorce order, including dividing their life insurance policies. The former spouses’ lawyers would have also included language allowing the former spouses to name new beneficiaries to their respective life insurance policies. Finally, the former spouses would have contacted their life insurance companies and provided them with divorce decree or order and selected new beneficiaries. It is also true that in some states the law automatically revokes a former spouse as a beneficiary. Unfortunately, not all cases work this way. Our life insurance beneficiary dispute lawyers will fight any beneficiary dispute and win! We will also handle any interpleader lawsuit
Sometimes, former spouses represent themselves in their divorce or they do not choose good attorneys. This may result in the former spouses accidentally missing property in the divorce decree or order, like their life insurance policies, or not including language allowing the former spouses to name new beneficiaries. This can create catastrophic circumstances. For example, if the former spouses’ divorce decree or order is not properly done, the former spouse/beneficiary may remain a beneficiary even if the insured spouse remarried. Or, if the divorce paperwork is confusing or unclear, it may allow the former spouse to claim the life insurance payout. The problem is without a written document providing clear instructions, current, and former beneficiaries may have problems obtaining the life insurance payout.
It is extremely important that former spouses make sure their respective life insurance policies are properly divided and that it is clear that they can remove their former spouse as a beneficiary on the policy and add a new beneficiary after the divorce. Being clear in the event of a divorce will ensure that a former spouse will not have an illegitimate claim to life insurance payout after the insured’s death and that the beneficiaries the insured intended the payout go to receive the payout without any issues.
Or, maybe the spouses do include the life insurance policies as property to be divided and they include language allowing the former spouses to name new beneficiaries, but the spouses forget to contact their life insurance companies. What happens?
It may be very difficult to fix this situation in the event the life insurance policy or language allowing for the change of beneficiaries was left out of the divorce decree or order. In this situation, there is no written agreement or court order stating that the policy belongs to one spouse or allowing for the beneficiaries to be changed. These circumstances may allow a former spouse to make a claim on life insurance proceeds if the insured spouse dies and there are no clear instructions.