Life Insurance Policies in Georgia: Unique Legal Issues

Life insurance policies are a cornerstone of financial planning, designed to provide a safety net for loved ones after an individual’s death. While the fundamental purpose of life insurance is universal, the legal framework governing these policies can vary significantly from state to state. In Georgia, policyholders and beneficiaries must understand a unique set of laws and legal principles that can impact the validity of a policy, the distribution of benefits, and the resolution of disputes.

Life insurance disputes in Georgia often emerge at the intersection of family law, estate planning, and insurance contract law. Questions commonly arise in divorce proceedings, in the drafting of wills and trusts, when powers of attorney are used, or in situations involving fraud, undue influence, forgery, or failed beneficiary designations. This article highlights Georgia-specific rules governing life insurance disputes and contrasts them with the federal Employee Retirement Income Security Act of 1974 (“ERISA”), which preempts many state rules for employer-sponsored group life insurance.

Baseline Rules for Life Insurance in Georgia

• Insurable interest. Under O.C.G.A. § 33-24-3, a person may take out insurance on his or her own life and assign it later. In Crummey v. Morgan Stanley, the Georgia Supreme Court held that such policies are not void merely because the insured intended to sell them after procurement.
• Discharge of insurers. Georgia protects insurers that pay the named beneficiary of record, even if a designation later proves forged or fraudulent, unless the insurer received written notice of an adverse claim. O.C.G.A. § 33-25-11; Emery v. Guarantee Trust Life Ins. Co., 356 Ga. App. 869 (2021).
• Changing beneficiaries. Georgia courts recognize “substantial compliance” with change-of-beneficiary requirements in some cases, but unsigned or incomplete forms will fail. See Lake v. Young Harris Alumni Foundation, Inc., 289 Ga. App. 526 (2007).

Divorce and Life Insurance in Georgia

• Georgia does NOT have a broad “revocation-on-divorce” statute for life-insurance designations. Unlike the wills context (see below), Georgia law generally does not automatically revoke a life-insurance beneficiary designation in favor of an ex-spouse just because the parties divorce. Georgia cases repeatedly warn: if you don’t change the form, the ex often stays the beneficiary. See White v. White, 253 Ga. 267 (1984) (divorce did not itself vest rights in ex-spouse’s favor or automatically revoke; issues turned on decree terms and equitable division), and practitioner discussions reflecting the same Georgia rule.
• Divorce decrees can create vested rights. Courts enforce decrees requiring one spouse to maintain life insurance for the benefit of children or an ex-spouse. Georgia courts will impose constructive trusts on proceeds of replacement policies. See Curtis v. Curtis, 243 Ga. 611 (1979); Zobrist v. Bennison, 269 Ga. 143 (1997).

Wills and Trusts

• Wills. Georgia’s revocation-on-divorce for wills statute, O.C.G.A. § 53-4-49, treats an ex-spouse as predeceased for testamentary gifts. That statute does not rewrite a separate contract’s beneficiary designation on a life policy. In short: updating your will doesn’t fix an outdated beneficiary form.
• Trusts. Policies commonly name revocable trusts or ILITs as beneficiary/owner to manage tax and distribution goals. Decrees that require insurance for child/spousal support can be satisfied via trust ownership as long as the decree terms are honored; Georgia courts will trace and enforce against replacements if needed (see Curtis, Whitehead, Zobrist, above). On insurable interest, trust arrangements are generally fine where the insured procures the policy (see O.C.G.A. § 33-24-3 and the 2022 decision upholding insured-owned policies intended for later sale).

Powers of Attorney

Georgia’s Uniform Power of Attorney Act requires express specific authority for an agent to “create or change a beneficiary designation.” The statutory form literally includes a checkbox for this power; without it, an attempted change by an agent is invalid. See O.C.G.A. § 10-6B-40(a) (specific-grant list) and § 10-6B-70 (statutory form listing “Create or change a beneficiary designation”). Agents also owe a duty to attempt to preserve the principal’s estate plan. Practice tip: when disputes arise, scrutinize the POA instrument for a clear grant of beneficiary-designation authority and compliance with the form.

Fraud, Undue Influence, and Forgery

• Insurer liability vs. claimant-to-claimant disputes. Because O.C.G.A. § 33-25-11 permits discharge by paying the record beneficiary absent notice of an adverse claim, insurers typically avoid liability for forged or unduly influenced changes unless they had timely notice. The fight then occurs between rival claimants (original vs. changed beneficiary), often via constructive trust, conversion, or unjust enrichment theories. See Emery, 356 Ga. App. at 873–79 (no general duty to investigate authenticity of change form; payment to facially valid designee discharged insurer).
• Standards to set aside a change. Georgia courts will void a change procured by forgery, fraud, or undue influence; expect fact-intensive proof (medical records, opportunity, suspicious circumstances, sudden deviations from longstanding plans). Where the owner substantially complied and the carrier accepted a change, a challenger needs evidence of wrongful procurement; where the owner did not comply (e.g., no signature), cases like Lake deny effect to the purported change.

Failed or Problematic Beneficiary Designations

• Predeceased or nonexistent beneficiary; missing forms; ambiguous designations. If a named beneficiary predeceases and there’s no contingent, policy terms govern (often defaulting to the insured’s estate). Absent a valid change, prior designations control; substantial compliance can save an imperfect change, but unsigned or unreturned forms usually fail (see Lake, supra). Insurers routinely file interpleader in state or federal court to let claimants litigate priority. Georgia’s scheme plus federal interpleader (28 U.S.C. § 1335) are the usual vehicles.
• Replacement policies after divorce obligations. If a decree required maintaining insurance and the insured later switched employers/carriers (or converted to an individual policy), Georgia decisions have awarded the decree beneficiary from the replacement policy up to the obligated amount (e.g., Curtis; Whitehead; Sparks v. Jackson, 289 Ga. App. 840 (2008); In re Estate of Belcher, 299 Ga. App. 441 (2009)). If the insured let the obligated policy lapse, the claim is often against the estate.

ERISA-Governed Life Insurance vs. Georgia Law

The rules differ dramatically when a policy is governed by ERISA—typically employer-provided group life insurance.

1. Federal preemption of state law.
   • ERISA broadly preempts state laws “relating to” employee benefit plans. This includes state revocation-on-divorce statutes and equitable remedies that would alter plan administration. See Egelhoff v. Egelhoff, 532 U.S. 141 (2001) (state law automatically revoking ex-spouse as beneficiary was preempted).
   • Georgia’s constructive trust remedies (e.g., Curtis, Zobrist) cannot override ERISA’s directive that the plan administrator pay the named beneficiary.
2. Plan documents rule.
   • Under ERISA, administrators must distribute benefits strictly according to plan documents and beneficiary forms. See Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 555 U.S. 285 (2009).
   • Even if a divorce decree waives rights, administrators must still pay the named beneficiary unless the form itself is changed.
3. No “substantial compliance.”
   • Unlike Georgia’s flexibility, ERISA requires exact compliance with plan procedures. Informal attempts to change a beneficiary that don’t meet plan requirements are ineffective.
4. Post-distribution remedies.
   • After distribution, courts sometimes impose constructive trusts or restitution claims against recipients (if consistent with federal law), but ERISA often blocks such remedies. For example, with federal employee insurance (FEGLI), state constructive-trust remedies are preempted. See Hillman v. Maretta, 569 U.S. 483 (2013).

Practical consequence:

• In Georgia state-law policies, equitable doctrines (constructive trust, substantial compliance, tracing to replacement policies) provide flexibility.
• Under ERISA, the “named beneficiary wins” rule applies, regardless of divorce decrees or alleged waivers—until and unless the actual beneficiary designation is changed on the plan documents.

Slayer Rule

Under Georgia’s O.C.G.A. § 53-1-5, a killer cannot benefit from insurance on the victim’s life. Similar exclusions exist under federal law.

Key Takeaways

1. In Georgia law policies: divorce decrees, constructive trusts, and equitable remedies often allow courts to enforce obligations even against replacement policies.
2. In ERISA plans: the plan administrator must pay the beneficiary on file, regardless of divorce, waivers, or equitable arguments. Only a formal change of beneficiary under plan procedures is effective.
3. Practice tip: Always update beneficiary designations immediately after divorce or major life events—particularly for ERISA-governed plans, where state-law safety nets don’t apply.

In conclusion, understanding the intricacies of life insurance in Georgia requires a deep dive into the state’s unique legal provisions and the parallel universe of federal ERISA law. From the critical importance of updating beneficiary designations after a divorce to the legal avenues available to contest a policy’s validity, a comprehensive understanding of these issues is essential for protecting a policyholder’s legacy and ensuring that their intended beneficiaries receive the financial support they deserve.