Disputes over who is entitled to life insurance proceeds after a policyholder passes away are not uncommon.
For example, one decedent had designated his kids as beneficiaries, and then began dating his new wife, who was thirty years younger than him, and they moved in together in April of that year and became engaged. Shortly thereafter, the decedent designated her as the sole beneficiary, and did so again following his diagnosis with terminal liver cancer. She filed a death claim the day after her husband died (at age 58), but she claimed that it was part of the paperwork process at the funeral home.
In the litigation, the children asserted that the wife used undue influence over their father to make the beneficiary change and that he was mentally incompetent to make the change. Either argument, under life insurance law, would be sufficient to overturn the life insurance beneficiary designation. However, they were not successful in either argument.
The court pointed out that the children failed to show sufficient evidence to support either contention. For example, the decedent's doctor testified to his mental competency. A daughter also claimed that her father had several relationships with other women and never named them as beneficiaries and that she did not believe he would have disinherited her of his free will. Also, it was asserted that the decedent took Oxy for spine issues, but there wasn't proof it affected him mentally. The judge stated that there was not enough evidence to so lead a reasonable finder of fact to conclude that the decedent was either incompetent or subject to undue influence.
The children also asked the court to impose a constructive trust on the life insurance policy proceeds for their benefit. The court declined to do so.
The decedent worked at the VA and the case was governed by the Federal Employees' Group Life Insurance Act. An employment benefit triggering the protections of ERISA will ensure that federal law is implicated which may lead to a different result than state law when there is a contest for the policy.
In addition, of course, in this case there was the family drama of children of the decedent fighting against his new wife for the policy. The case is therefore a reminder that it is important for an insured to make all of his or her heirs aware of his estate planning desires. Call our life insurance lawyers today to discuss your claim.