Estate Planning, Divorce and Life Insurance Proceeds

One of my clients recently experienced the death of her husband in a car accident. Her husband had been married and divorced prior to his marriage with my client. During his previous marriage he had taken out a $500,000 life insurance policy naming his former wife as the beneficiary of the policy.

According to my client, her husband's divorce from his former spouse was "long, agonizing and hateful." During the divorce proceedings the two former spouses tried all in their power to hurt the other spouse. Their actions included revealing intimate details of their married life during open Court proceedings, using their two minor children as leverage against each other and destroying certain assets that had no real monetary value but significant sentimental value. These facts are important given the life insurance policy naming the ex-wife as beneficiary.

It is clear from what my client has told me that her spouse did not intend for his ex-wife to remain the beneficiary of the policy after his death. This is evidenced by her spouse having removed his ex-wife from other legal forms like the Enhanced Life Estate Deed he had drawn up prior to his divorce. It is also clear that her husband's divorce attorney either did not know about the policy or knew and failed to advise my client's husband to change the beneficiary.

The Florida Probate Code
In Florida, divorce does not remove the ex-spouse as beneficiary under a life insurance policy. Florida takes the position that the life insurance policy is a contract and should not be interfered with unless fraud is involved. Further, if the deceased wanted to change the beneficiary he could have done so at any time but chose not to. It is not for the legislature to alter the terms of the written contract in determining the mind and will of the contracting party.

This means that my client will most likely not receive the proceeds from the life insurance policy and that my client's husband's ex-spouse will. To rub salt in the wound, the policy was primarily paid for during my client's marriage from funds that belong (at least in part) to my client. An argument might be made that since the funds used to pay for the policy were my client's as well as her husband's it would be inequitable to distribute the proceeds to my client's husband's ex-wife.

The Uniform Probate Code
In the above regard, Florida differs from states that follow the Uniform Probate Code to determine the life insurance beneficiary. States that follow the Uniform Probate Code would sever the tie between the divorced spouses and replace the beneficiary. The new beneficiary would be determined using a similar system to the intestate statute. This means that if my client's husband's insurance policy were governed by the Uniform Probate Code, my client would most likely receive the proceeds from the policy. This would also apply to ex-spouses named as beneficiaries under a Lady Bird Deed.

A word of advice, check your insurance policy today to be sure who you have named as beneficiary. Do not rely on the numerous statutory probate codes to determine who will get the insurance proceeds. If you need assistance reviewing the policy or changing your beneficiary, contact one of the attorneys above.

Other Estate Planning Articles
Estate Planning and the Enhanced Life Estate Deed, The Difference Between the Enhanced Life Estate Deed, Warranty Deed and Quit claim Deed, The Traditional Life Estate Deed, The Revocable Transfer on Death Deed and California's Revocable Deed.
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