When Are You Permitted to Contest a Life Insurance Beneficiary?
There is no hard and fast rule that states when a person can contest a life insurance beneficiary. The decision to contest is often situational. Has something happened that makes you believe a beneficiary designation is invalid?
In many cases, things like a divorce, a will, a separation agreement, criminal activity, or lack of mental capacity may lead one to believe that the beneficiary is not entitled to the death benefit. There are numerous reasons why a person may not be entitled to a death benefit.
If you find yourself in a situation where you do not believe a beneficiary designation is valid, contact an attorney. These issues can often be difficult to navigate without legal help.
Typical Situations Where Contesting a Beneficiary Designation is Helpful
Not every situation calls for someone to contest a beneficiary. However, there are several common situations that create great suspicion or permit valid legal challenges to a beneficiary.
As a rule of thumb, if you do suspect wrongdoing or that someone is not entitled to a death benefit, speak with a life insurance attorney.
You Need Standing
The fact that you believe someone is not a rightful beneficiary is not enough to contest a claim. It is important that the rightful beneficiary contest the claim and bring a claim of their own.
In other words, you need standing to make a claim. Failure to have a legitimate basis to make a claim will prevent you from contesting another person’s claim.
The Ex-Spouse Claimant
One issue that comes up often is a person forgets or fails to remove someone as a beneficiary on their life insurance. In some cases, the law presumes that you intended to remove a person as beneficiary.
The most common example of this is ex-spouses. Many states have spousal revocation laws that automatically revoke your ex-spouse’s rights as a beneficiary in the event of divorce. These issues can often be complex.
For example, a property separation agreement may give an ex-spouse a right to life insurance proceeds. There may have been other assurances that the ex-spouse would continue to be a beneficiary following divorce. There may also be other written documents, such as trusts, that include a death benefit that is meant to benefit an ex-spouse.
Community Property Claims
Community property states such as Texas, California, Louisiana, and Washington have unique complications that could impact whether a beneficiary designation is valid.
In community property states, each spouse is entitled to equal shares of the estate’s assets unless there is a separate nuptial agreement.
Community property laws view the assets accumulated during marriage – including life insurance policies – as part of a common marital estate. When the marriage ends due to divorce or death, these assets are supposed to be combined together to be distributed.
An ex-spouse or surviving spouse may have the ability to undo a beneficiary designation if they do not receive their legal share of the marital estate because the life insurance policy names an outside beneficiary.
Wills, Trusts, or Other Evidence
One issue that comes up often is can beneficiary designation be rescinded through a will, trust, or other document.
Most often, you need to comply with the insurance company’s requirements to change a beneficiary for it to be effective. It is important to understand these requirements because an attempted beneficiary change may not be effective.
Forgery, Duress and Undue Influence
Sadly, some people will take advantage of the elderly or sick to force a change of the beneficiary. While it is often difficult to prove in court, you should investigate suspicious circumstances and consult with an attorney and possibly law enforcement if there is evidence of wrongdoing.
One of the biggest red flags is sudden or unexpected changes to life insurance beneficiaries. The reality is bad things sometimes happen. We have seen instances where beneficiary designations have been forged or changes have been made when the owner of the policy was sick and dying.
We have assisted clients in lack of capacity cases including cases involving You should strongly consider filing a separate claim or demanding that the funds be interpleaded by the insurance company so these issues can be resolved by a court.
Ineffective Beneficiary Changes
Sometimes an owner of a life insurance policy will attempt to change the beneficiary but not follow the insurance company’s requirements to do so.
For example, a beneficiary change form may require that it be witnessed or notarized, or, an insurance company may not accept other written documents such as a last will and testament to make a beneficiary change.
The fact that a person clearly intended to change the beneficiary is simply not enough sometimes. Failure to properly change the beneficiary or even make an effective beneficiary change in the first place can invalidate someone’s claim.
Contact a Life Insurance Lawyer at Johns Law Group
Each disputed beneficiary claim is unique and the specific facts of that claim are critically important.
It is important to speak with an attorney at Johns Law Group, PLLC if you do not believe another person is a proper beneficiary of a life insurance policy.
The law on beneficiary disputes is complex. Once you dispute a claim, the assistance of an attorney can help you reach a satisfactory conclusion to your case.
Contact us online or give us a call today if you would like to discuss your life insurance issue.
Jeremiah Johns is a former insurance defense attorney who now represents plaintiffs in bad faith insurance, catastrophic injury cases, and commercial disputes. He has a unique perspective from his experience representing some of the nation’s largest insurance companies.
Jeremiah is licensed to practice law in Texas, Louisiana, Florida, and Georgia (though he is presently inactive in Georgia). He is also admitted to the 5th Circuit Court of Appeals. For his education, Jeremiah earned an LL.M. in Admiralty from Tulane University, a J.D., cum laude, from Syracuse University, and both a B.A. and B.S., magna cum laude, from Georgia State University.
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