Life insurance beneficiary disputes often become legally complex, especially when an ex-wife and a new wife are involved. However, in more than half the states, such disputes may be preempted by automatic revocation statutes, which serve to nullify the designation of a former spouse as a beneficiary upon divorce. These laws highlight the importance of understanding state-specific regulations and updating policies after major life events. The top life insurance lawyers at LifeInsuranceAttorney.com handle all beneficiary disputes as well as interpleader lawsuits.
Example: John had purchased a life insurance policy years ago, naming his then-wife, Sarah, as the primary beneficiary. After their divorce, John remarried and started his new life with Emily but failed to update his policy to designate Emily as the new beneficiary. When John died, the omission set the stage for a potential life insurance beneficiary dispute or interpleader lawsuit between Sarah and Emily over the life insurance proceeds. In states with automatic revocation statutes, the outcome of this case might differ from common assumptions. These statutes generally provide that upon divorce, the ex-spouse is automatically removed as the beneficiary of the policy, unless explicitly reaffirmed by the policyholder post-divorce. If John lived in such a state, Sarah's designation as the beneficiary might have been legally invalidated at the time of their divorce. This would leave the policy proceeds to either default to the contingent beneficiary, if one was named, or to John's estate if no alternative was specified. For Emily, the situation could still be challenging. While the statute might eliminate Sarah’s claim, it would not automatically name Emily as the new beneficiary unless John had formally updated the designation. A lot of factors go into ascertaining who the rightful beneficiary is. One factor is whether the life insurance was addressed in the divorce decree.
Our top life insurance lawyers handle all beneficiary disputes. If the dispute becomes an interpleader action, our life insurance law firm will handle that as well.