by Guest » Fri Sep 16, 2011 09:21 pm
My father recently passed i was informed that I was beneficiary on one policy. The other policy he had the beneficiary as my mother who is actually his ex wife. His current wife contested the policy, sent in a divorce decree and the life insurance company told he that she was denied. She is now contesting again and the life insurance company told her that there is nothing they can do because all they have record of is his ex wife's name as the bene. Along with the divorce decree she sent in copies of form that my father filled out splitting up the life insurance in different percentages between herself and all of us kids but he did the forms wrong the percentages were not right. She told me that if she is to get the money then none of us kids are getting anything! Is there ANYTHING SHE CAN SUBMIT to over turn the life insurance company's denied decision?
Posted: Wed Sep 21, 2011 12:11 pm Post Subject:
why would the insurance company DENY the current spouse on her claim?
Simple. Insurance companies do not pay death claims to persons not named as a beneficiary. In this case, everyone can see the turmoil caused by not properly completing the requirements to change a beneficiary.
Although some insurance companies will accept a written statement as a change of beneficiary, most insurance companies have their own specific form for naming/changing beneficiaries after the policy is in force. Typical policy language states something like: " . . . in a form acceptable to us." By this, the insurance company normally means "our form".
[ From an earlier post ]
He filled it out wrong for the simple fact that he had the percentages all wrong they did not equal 100% They then sent him a letter stating that he filled it out wrong and to redo it. He then started filling out another form in which he never filled out all the way and never signed nor turned in.
Failure to use this form, or to fill out the form properly -- as was the case here, plugging in numbers that did not add to 100% -- forces the insurance company to disallow the change the owner/insured intended. Failure to sign the form is another common reason for the insurance company not to accept it. Until it is done correctly, signed, and submitted prior to the insured's death, nothing changes, and the existing beneficiary statement remains in force.
Except that in this case state law automatically disqualifies an ex-spouse as the beneficiary.
They did inform me that under the ERISA act the spouse had the right to appeal
Well, this is new information. Was the life insurance provided as an employee benefit? You haven't mentioned this before.
However, it makes a difference. Although ERISA provides uniform (non-discriminatory) protections to employees as far as access to and participation in employer-sponsored benefit plans, including life insurance, the matter of life insurance beneficiaries may still be controlled under state laws.
The US Supreme Court has ruled on this very issue of spousal disqualification, and allows the "plan document" to control -- if state law impermissibly interferes with ERISA, then ERISA preempts state law and the plan document controls. I don't know why an attorney would raise false hopes by filing an "ERISA Appeal" on behalf of the current spouse -- it will likely go nowhere, but still cost someone money . . . all the while filling the attorney's pocket. [[ My advice to the spouse using the attorney would be to not pay. Let the attorney sue for non-payment of his fee and have to defend his lack of knowledge of federal employee benefit and state insurance laws in court. ]]
o if the change of bene form was filed out incorrectly and my father is now deceased and my mother (the ex wife) is disqualified ...where does the money go? I am the contingent bene on this policy...would it go to me?
If the named beneficiary is disqualified statutorily (by law), then the contingent beneficiary is next in order to receive the policy proceeds. If that is you, then you should file your own claim with the insurance company.
In a "worst case" scenario, if your claim is also denied (if you were not actually listed as the contingent beneficiary), then the money goes into the estate of your deceased father, where the probate court will first use the money, together with all other estate assets, to satisfy the claims of creditors, and then parcel the remainder of the estate (as cash or property) to heirs in the order established according to state law.
Posted: Wed Sep 21, 2011 12:22 pm Post Subject:
Meanwhile, as I can think of, you may not receive the proceeds. As your mom and your dad's second wife, both are alive.
If the insurance company chooses not to give the benefits to the current spouse, it'll go to your mother.
This information from MonaWayne is fundamentally incorrect, and shows a lack of understanding of death claims and beneficiaries.
It has nothing to do with who is alive if neither of the living persons is not listed as a beneficiary. Insurance companies do not act with disregard for the law. And they don't "choose" which beneficiary will be paid. They follow the dictates of the contract and state insurance laws.
If state law disqualifies a named beneficiary as the result of a divorce, the insurance company cannot lawfully pay anything to that person, despite their assertions. Likewise, a person cannot be substituted by the insurance company as the life insurance beneficiary simply because they are the current spouse.
The only thing the insurance company can do is pay the money to a named beneficiary. If the primary is deceased or disqualified at the time of the insured's death, the contingent beneficiary -- if one was named -- is automatically elevated into the primary position.
If this matter involves an employer-sponsored group life policy, the rules are not different. ERISA only governs eligibility for the benefit on the part of the employee. Unlike retirement plans, where federal law controls and now (as of 2009) relies on the plan document to determine the beneficiary of employer-sponsored retirement plan proceeds (usually dependent on a current beneficiary statement or other exclusionary language), as stated in my prior post, state law currently governs all other aspects of life insurance contracts, group or individual, unless it impermissibly affects an ERISA plan document. If state law is in conflict with an ERISA plan document, then state law is preempted. Beneficiary is one area where state law may conflict with a plan document.
So disregard Mona's assessment of your situation. If you actually were named as the contingent beneficiary, the life insurance proceeds would be payable to you.
Posted: Wed Sep 21, 2011 12:25 pm Post Subject:
Meanwhile, as I can think of, you may not receive the proceeds. As your mom and your dad's second wife, both are alive.
If the insurance company chooses not to give the benefits to the current spouse, it'll go to your mother.
This information from MonaWayne is fundamentally incorrect, and shows a lack of understanding of death claims and beneficiaries.
It has nothing to do with who is alive if neither of the living persons is not listed as a beneficiary. Insurance companies do not act with disregard for the law.
If state law disqualifies a named beneficiary as the result of a divorce, the insurance company cannot lawfully pay anything to that person, despite their assertions. Likewise, a person cannot be substituted by the insurance company as the life insurance beneficiary simply because they are the current spouse.
The only thing the insurance company can do is pay the money to a named beneficiary. If the primary is deceased or disqualified at the time of the insured's death, the contingent beneficiary -- if one was named -- is automatically elevated into the primary position.
If this matter involves an employer-sponsored group life policy, the rules are not different. ERISA only governs eligibility for the benefit on the part of the employee. Unlike retirement plans, where federal law controls and automatically installs the current spouse as the beneficiary of employer-sponsored retirement plan proceeds, as stated in my prior post, state law currently governs all other aspects of life insurance contracts, group or individual.
So disregard Mona's assessment of your situation. If you actually were named as the contingent beneficiary, the life insurance proceeds would be payable to you.
Posted: Wed Sep 21, 2011 12:58 pm Post Subject:
Finally, if this matter does involve an employer-sponsored life insurance policy, the current spouse might have a cause of action against the employer.
The change of beneficiary was probably initiated through the employer's HR department. Someone there probably gave your father the beneficiary change form, and may have received it back to send to the insurance company. If so, that person has some responsibility to look the form over to assure that it is completely and properly filled out.
That HR employee acts as the employer's "agent" (not as an insurance agent), and obligates the employer to his/her negligent acts. Not all HR employees are knowledgeable when it comes to filling out such forms, and most probably have little or no understanding of the importance of insurance beneficiaries. But that does not relieve the employer if the HR employee was "negligent" in the performance of his/her duties.
If it could be proved that someone at the business was in the chain of events between your father and the insurance company, then the business's failure to properly assist the employee might obligate the company to provide the equivalent of the death benefit to those persons the deceased employee intended to be his beneficiaries.
You could receive the death claim from the insurance company, and the current spouse could receive an equal amount from the employer directly (minus the 30%-40% the attorney would take). Maybe even more if punitive damages were awarded.
Posted: Wed Sep 21, 2011 02:47 pm Post Subject:
Max....First off your help has been AMAZING! Im glad their are people out here like you that take their time to help out people...truly a blessing!
First...Ok..When I spoke with "METLIFE" I asked them..If I were to start life insurance with you guys and I named my wife at the time the bene...then I re marry and i do not change my ex wife as the bene and I die then the money will go to the ex...They told me CORRECT. I understand what your saying that by Law in the state of MI the ex is disqualified but what I dont get is why when the insurance company found out my father passed and they were given the information (being the divorce decree and the in correct change of bene forms) They knew his ex wife was still the bene and they know by LAW that she is disqualified why would they tell me that my mother (the ex spouse) is entitled to the money? It would appear that they must know the laws and that would have been a huge red flag!
The life insurance policy was a basic policy through General motors so yes it was an employee benefit..
Posted: Wed Sep 21, 2011 04:07 pm Post Subject:
When I spoke with "METLIFE" I asked them..If I were to start life insurance with you guys and I named my wife at the time the bene...then I re marry and i do not change my ex wife as the bene and I die then the money will go to the ex...They told me CORRECT.
I don't know who you talked to at the insurance company. If it wasn't someone from the claims department, with specific knowledge that Michigan is involved, you cannot rely on that answer.
But you also cannot confuse individual insurance with insurance under an ERISA-covered plan. For that, you have to look to the plan documents. If the plan document says a divorced spouse loses all entitlement to an employee's benefit, that's the way it goes. If it says the life insurance beneficiary is whoever was named last, that's the way it goes, unless state law says otherwise, but then only in a way that does not violate ERISA-preemption. If the plan document is silent on the matter of LIFE INSURANCE BENEFICIARY, then state law will control.
You threw a big monkey wrench into this discussion by not stating up front that the insurance in question was an employer-sponsored life insurance plan. Without seeing the plan document, it's impossible to give you specific answers. My apologies if prior posts did not address this.
Posted: Wed Sep 21, 2011 04:33 pm Post Subject:
I totally understand. I didnt think about stating it was an employee policy until you had mentioned it. I did speak with the claims department and spoke with them about being in Michigan that my mother (the ex) is automatically dq'd by law an she informed yes but their Federally regulated so that would trump any state ruling. Im taking it that with it being an employee policy the "Plan Documents " must state that whoever the bene was last then that who it goes to like you stated.
Posted: Wed Sep 21, 2011 04:41 pm Post Subject:
This is becoming even more complicated. There is a recent Michigan Supreme Court decision (2007) directly relevant to this post, and the news may not be good.
SEE: www.courts.michigan.gov/supremecourt/Clerk/Opinions-05-06-Term/126913.pdf - 2007-03-01
The Court held, on appeal, that while the named, but divorced, beneficiary was entitled under the ERISA plan document to be paid the life insurance proceeds, the "waiver" to future entitlement to life insurance proceeds in the divorce decree did not allow the beneficiary to legally retain the money, and she was ordered by the Court to pay an equivalent amount to the estate of the decedent.
Now we have to look at both the plan document and the divorce judgment document. If the plan document says pay the money to the ex-spouse, because she is the named beneficiary who was never changed, but the divorce order says that same person has waived her right to the proceeds, then here's what must happen:
The insurance company pays the money to the ex-spouse as the named beneficiary, as required by the Plan Document. But the ex-spouse must immediately turn over the money to the estate of the decedent. If the ex-spouse has waived her right to the proceeds and does not turn the money over to the estate, then the estate may sue the ex-spouse for violating the waiver in the divorce order.
But if the plan document says pay the ex-spouse as the named beneficiary, and the divorce order does not expressly waive the right to the life insurance money, then the money belongs to the ex-spouse as the named beneficiary, and no one else has a claim to the money.
If the plan document removes an ex-spouse as beneficiary, and no new primary beneficiary was named, but there was a named contingent beneficiary, the money is payable to the contingent. If there is no contingent, the money is paid to the estate of the decedent.
If the plan document is silent on the matter of life insurance proceeds (it probably is not), then Michigan state law removes the ex-spouse as the beneficiary, and the proceeds are payable to the contingent beneficiary, if one is named. If there is no named contingent beneficiary, the money will be paid to the estate. Unless there was an explicit grant of the future life insurance proceeds to the ex-spouse.
If there is an explicit giving of existing life insurance proceeds to the ex-spouse in the divorce judgment, that supersedes state law which would otherwise remove the ex- as beneficiary.
The current spouse is generally out of luck unless the money is payable to the estate. In the estate, if the matter is forced into Probate Court, it will first be used to satisfy the claims of creditors, with the balance of the estate probably going to the spouse as her sole property, with nothing apportioned to anyone else, because probate law generally looks to the surviving spouse before looking to children, parents, siblings, or other surviving relatives (aunts, uncles, cousins, nieces, nephews).
If the matter has not been forced into Probate Court, then the decedent's property rights automatically inure to the surviving spouse, unless there is some other legal instrument preventing that (a "prenuptual" agreement or other tacit legal agreement). The life insurance money the ex-spouse is not entitled to keep would have to be turned over to the new spouse as the successor to the estate of the decedent.
THIS IS MAKING MY HEAD SPIN! Everyone else who reads this thread probably has a headache by now.
You have a lot of reading to do. (1) ERISA plan documents, (2) divorce orders, (3) Michigan and US Supreme Court opinions. This could go in any one of two or three different ways. As a contingent beneficiary, you may or may not see any of the money, depending into whose hands the money must eventually drop first. (At least the New Spouse is later in the list than ex-spouse of first to touch the money, but she may be in second place.)
This will be more complicated than less complicated by the time everything is said and done.
Posted: Wed Sep 21, 2011 04:59 pm Post Subject:
WOW....a lot of research to do...I will make sure I keep you up to date on the actions taken. I can only imagine how many people go through this. My only thing is this...a day before my dad passed my step mother told me it was very important we find his insurance papers because he told her he left life insurance for us kids. She then found out that she was not going to receive his pension and then she flipped it to where she wanted the life insurance money and that if she obtained it then their would be no money given to us kids. In the forms he filled out in correct her percentage was only 10 percent! It was that way for a reason...
Posted: Wed Sep 21, 2011 05:39 pm Post Subject:
Start with the plan document and see if it says anything about divorce. If it doesn't, then go to the divorce order between mom and dad and see if it says anything about life insurance.
If the plan document says nothing about divorce (as in automatically terminated), she most likely remains the ERISA beneficiary, and the money is payable to her. If the divorce order says nothing about life insurance, she keeps the money, because ERISA probably preempts state probate law that would otherwise disqualify her.
If the plan document removes an ex-spouse, you may still need to go to the divorce order. Under ERISA, ex-spouse will not be the beneficiary, and a contingent beneficiary would receive the money. If there is no contingent beneficiary, then the money goes to the estate (new spouse).
But if the divorce order gives specific entitlement to the life insurance, and the proceeds go to the estate, ex-spouse has a claim against the estate for the value of the proceeds. [[ This is the specific instance of the Michigan Supreme Court case above, only in reverse. ]]
She then found out that she was not going to receive his pension and then she flipped it to where she wanted the life insurance money and that if she obtained it then their would be no money given to us kids. In the forms he filled out in correct her percentage was only 10 percent! It was that way for a reason...
Oh, boy! Want to open a whole new can of worms? You might be able to argue that the correctly filled out form (if it was, and was signed and dated by dad) was discovered by ex-spouse and deliberately not filed contrary to dad's dying wishes. It could have been mailed/ postmarked the day prior to his death and it would have been received as a valid change of beneficiary. And all of this discussion would be moot.
The lawyers would love this one. They would all win, and everyone else would lose.
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