I am the beneficiary of my ex-husband’s $250,000 life insurance policy. He is now threatening to change it. Is he in violation of our divorce decree?
Dear Quentin,
My ex-husband has a $250,000 life insurance policy. I’m 50 and I only have $45,000 saved. When we divorced, I made sure I was the designated beneficiary so that I could have the security as I aged and pass it on to my children, but he informed both of my children that he could no longer afford to pay the $200 per person. monthly premiums, and they should pay them. He has also long threatened to change the beneficiary designation. Can he do this?
This is his way of trying to undo the promise and commitment he made during our divorce. I understood that our divorce agreement specified that I was to remain a beneficiary of his life insurance, that’s how I remember it. I hoped, but never fully believed, that he would follow through on this. He was never faithful in our marriage and he took pride in stiffing the people he did business with and not paying his bills. Once a cheater, always a cheater.
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Ex-wife and mother
Dear ex-wife,
The answer, my friend, should be in your divorce decree.
“Assuming there is a life insurance requirement in the divorce decree, it should specify who will pay the premiums,” according to MassMutual. “It is important to have clear terms and responsibilities as it could be detrimental to beneficiaries if premiums are not paid. If you have added your ex-spouse to the policy, you can request to receive copies of billing records and forfeiture notices.
People usually add a provision stating that the beneficiary cannot be changed without their consent. By the time of your divorce, you and your attorney should have clearly defined who owns the policy, MassMutual adds. “This is important because the policy owner has the ability to change beneficiaries, rates and insurability, which can help protect your income. It is also possible to transfer ownership of an existing contract before divorce proceedings.
You do not mention the type of life insurance policy your husband owns. A term insurance policy lasts 10 to 30 years, and if your ex-husband survived that period, the policy would expire and the beneficiaries would receive no money. On the other hand, a whole life insurance policy has a cash value and, for this reason, costs more than a term life insurance policy. Once a whole life insurance policy has accumulated significant monetary value, the insured person can cash it out or borrow against it.
It is not that unusual for a spouse to fail to comply with a divorce decree regarding a life insurance policy. The spouse could terminate the contract, replace it or even change the beneficiaries. There are several problems here. First, it is your ex-husband’s responsibility to pay for the life insurance policy and not make it his children’s responsibility. It’s unfortunate, unfair and petty that he puts them in the middle of your dispute.
In Hillman v. Maretta, the U.S. Supreme Court ruled in favor of a 66-year-old man’s ex-wife, rather than his widow, as the beneficiary of an insurance policy -life worth more than $124,000. In this case, perhaps he did not want his ex-wife, whom he had divorced 10 years before his death, to claim on his life insurance. But the divorce decree didn’t matter because the document given to the insurance company had his ex-wife’s name on it.
State law varies
If your divorce decree was unclear regarding the beneficiary of your ex-husband’s life insurance policy, the outcome may depend on your state’s laws. Can a divorce decree void a life insurance policy? “Yes. If the policyholder married in a community property state and divorced, the ex-spouse may be entitled to a portion of the death benefit, regardless of the designated beneficiary,” according to Boonswang Law from Philadelphia.
About half of U.S. states – including Florida, Pennsylvania, New Jersey, New York, Texas, Massachusetts and Colorado – have some form of divorce revocation law that automatically removes a former spouse from the status of beneficiary of life insurance after divorce, adds the law firm. California law, on the other hand, excludes life insurance policies from automatic revocation laws in divorce.
According to Carina Castañeda, an attorney in Manhattan Beach, Calif., a life insurance beneficiary for an ex-spouse in California will be withheld, “unless the property settlement or divorce decree specifically provides for a contrary result; the policyholder modifies the designation of the beneficiary; an insurance contract cancels the beneficiary designation in the event of divorce; (or) the ex-spouse legally waives his or her interest in the policy.
We would all like to believe that ex-spouses will keep their word and perhaps act more honorably than during the marriage, whether it’s child support, alimony, life insurance policies or retirement accounts. But divorce doesn’t necessarily change people. In many cases, this can be an opportunity for an ex-spouse to once again exercise the power they have to disrupt their ex’s life.
Your divorce attorney should be able to advise you on what steps you can take based on your state’s laws and the exact wording of your divorce decree. Beneficiary disputes, as the aforementioned case suggests, can be extremely complex and difficult to win. They can also, if they end up going to a higher court and dragging on for years, be extremely expensive. Your legal advisor will be able to tell you if it is worth it.
Stay strong, stay focused and don’t let your ex get under your skin.
Previous columns by Quentin Fottrell:
My husband spent $85,000 on repairs to my house before we got married. Does the house remain a separate property? What happens if I die?
“He holds all the cards”: my mother, 86, suffers from dementia. His partner of 30 years is on the deed to his home. How can I take control of his finances?
I was bitten by a feral cat and my hospital co-pay wiped out my savings. I am 50 years old, single and have no children. Should I cash in my $12,000 life insurance policy?
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