Dear Quentin,
My ex-husband has a $250,000 life insurance policy. I’m 50 years old and I’ve only saved $45,000. When we divorced, I made sure I was the named beneficiary so I could have security as I got older and pass it on to my children, but he has informed both of my children that he can no longer afford the $200 a year. monthly premiums, and they would need to pay them. He has also long threatened to change the beneficiary designation. He can do that?
This is his way of trying to undo the promise and commitment he made when we got divorced. I understood that our divorce settlement specified that I was to continue to be the beneficiary of his life insurance policy – that’s how I remember it. I hoped, but never fully trusted, that he would follow through. He was never faithful in our marriage and took pride in hardening 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 clearly defined terms and responsibilities as it can be detrimental to beneficiaries if premiums are not paid. If you added your ex-spouse to the policy, you can request to receive copies of billing records and forfeiture notices.”
People often add a clause saying that the beneficiary cannot be changed without your consent. At the time of your divorce, you and your attorney should have clearly defined who owns the policy, adds MassMutual. “This is important because the policy holder has the ability to change beneficiaries, rates and insurability, which can help protect your income. It is also possible to sign away ownership of an existing policy prior to the divorce process.”
You don’t mention what type of life insurance policy your husband has. A whole life policy lasts 10 to 30 years, and if your ex-husband survived that period, the policy would expire and the beneficiaries would not receive any money. A whole life policy, on the other hand, has a cash value and therefore costs more than a whole life policy. Once a whole life policy accumulates significant cash value, the policyholder can cash it out or take out a loan.
It is not that uncommon for a spouse to default on a divorce decree over a life insurance policy. The spouse can cancel the policy, replace it, or even change beneficiaries. There are several questions here. First, it is your ex-husband’s responsibility to pay for the life insurance policy and not make it the children’s responsibility. It is regrettable, unfair and petty that he puts them in the middle of his dispute.
In Hillman x 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 a life insurance policy worth more than $124,000. In this case, he may not want his ex-wife, whom he divorced 10 years before her death, to claim his life insurance policy. But the divorce ruling didn’t matter, because the document given to the insurance company had the ex-wife’s name on it.
State law varies
If your divorce decree was unclear as to the beneficiary of your ex-husband’s life insurance policy, the outcome may depend on the laws of your state. Can a divorce judgment void a life insurance policy? “Yes. If the insured married in a community property state and divorced, the ex-spouse may be entitled to part of the death benefit regardless of who the named beneficiary is,” according to Lei Boonswang in Philadelphia.
Approximately half of U.S. states—including Florida, Pennsylvania, New Jersey, New York, Texas, Massachusetts, and Colorado—have some form of post-divorce revocation statute that automatically removes an ex-spouse as a life insurance beneficiary after divorce. , adds the law firm. California law, meanwhile, excludes life insurance policies from automatic revocation laws after divorce.
A life insurance beneficiary for an ex-spouse in California will be approved, according to Carina Castaneda, attorney in Manhattan Beach, California, “unless the property settlement or divorce decree specifically provides for a contrary outcome; the insured changes the beneficiary designation; an insurance contract voids 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 they did during the marriage, whether it concerns alimony, alimony, life insurance policies or retirement accounts. But divorce doesn’t necessarily change people. In many cases, it can present an opportunity for an ex-spouse to once again exercise whatever power they have to create disruption in their ex’s life.
Your divorce attorney should be able to advise you on what actions you can take based on your state’s laws and the exact wording of your divorce decree. Disputes between beneficiaries, as the aforementioned case suggests, can be extremely complex and difficult to win. They can also, if they end up appealing 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:
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