It will depend on what was put into writing – or not! On January 10, 2022, the Massachusetts Supreme Judicial Court docket (SJC) dominated that the place a former husband failed to alter the beneficiary designation on his life insurance coverage coverage, the divorce operated to revoke the designation of his former spouse as main beneficiary.
Within the case of American Household Life Assurance Firm of Columbus v. Joann Parker, the SJC was requested to think about whether or not the Massachusetts Uniform Probate Code (UPC), which went into impact on March 31, 2012, utilized retroactively to a coverage of insurance coverage bought by Sean Parker in 2010.
When he bought the life insurance coverage coverage in 2010, Sean named his then-wife, Daybreak, as main beneficiary and his mom, Joann, because the contingent beneficiary. Sean and Daybreak divorced in 2016, however their Separation Settlement makes no point out of the life insurance coverage coverage. Reasonably, their Separation Settlement offers solely that they divided their private property to their satisfaction and that there have been no agreements between them exterior of the Separation Settlement.
Following the divorce, Daybreak continued to pay the premiums on Sean’s insurance coverage coverage, as a result of she claimed he had agreed that she stay the beneficiary of the coverage. Sean died in 2018 with out having modified his authentic beneficiary designation to somebody aside from Daybreak. The insurance coverage firm challenged Daybreak’s request to be paid the dying profit provided that the events have been divorced two years earlier.
Part 2-804 of the Massachusetts UPC offers:
Besides as supplied by the specific phrases of a governing instrument, a courtroom order, or a contract regarding the division of the marital property made between the divorced people earlier than or after the wedding, divorce, or annulment, the divorce or annulment of a wedding:
(1) revokes any revocable (i) disposition or appointment of property made by a divorced particular person to the person’s former partner in a governing instrument and any disposition or appointment created by regulation or in a governing instrument to a relative of the divorced particular person’s former partner….
The Trial Court docket dominated that Part 2-804 utilized retroactively and Joann was entitled to the life insurance coverage proceeds, not Daybreak. Daybreak filed an enchantment. In ruling that Daybreak was out of luck, the SJC held that the UPC expressly supplied for retroactive utility of its provisions as follows:
Besides as supplied elsewhere on this act, on the efficient date of this act:
1. this act shall apply to pre-existing governing devices, besides that it shall not apply to governing devices which turned irrevocable previous to the efficient date of this act….
Daybreak’s first mistake was failing to have counsel signify her within the preparation of the Separation Settlement, which made no point out of the life insurance coverage coverage. Her second mistake was not getting into right into a written settlement with Sean, following the divorce, that her fee of the life insurance coverage premiums entitled her to the life insurance coverage proceeds.
On this case, the SJC has dominated for the primary time that Part 2-804 does certainly apply retroactively to revocable appointments of property made to a former partner. The SJC identified that Part 2-804 was designed, partially, to guard individuals who made pre-divorce beneficiary designations in favor of their ex-spouse after which failed after the divorce to comply with technical necessities to alter these designations.
It’s, in fact, at all times finest to overview and alter beneficiary designations following a divorce to keep away from the battle of the beneficiaries, just like the ex-wife and her former mother-in-law on this specific case. Nevertheless, the UPC now clearly applies as a stop-gap towards failure to make a change of beneficiary after the divorce.