Appellate Division rules that beneficiary designation on life insurance policy controls the proceeds

Merely being married does not always create property rights to assets owned by the spouse. The NJ courts were faced with that question in Fox v. Lincoln Financial Group and Scarpone, Appellate Division A-3189-13T4, decided February 24th, 2015 and approved for publication.

The decedent, Michael J. Fox, owned a life insurance policy issued by Lincoln Financial group. In 1996, after divorce from his first wife, he named his sister (Scarpone) as the primary beneficiary.  Six years later, he married. However, he died in a tragic accident just six weeks later without having submitted any Change of Beneficiary Form to the insurance company. His widow sued to receive the life insurance proceeds, asserting that her husband had promised her that he would be naming her as beneficiary on his accounts and policies. The Court rejected her claim, and held that the deceased had taken no steps to attempt to name her as the beneficiary of the policy and therefore, his previous beneficiary designation controlled the proceeds.

In earlier cases, the NJ courts had ruled that (1) a divorce presumptively severs an ex-spouse’s claim to life insurance proceeds unless there is evidence to show that it was intended that the ex-spouse continue to be the beneficiary, Vasconi  v. Guardian Life Insurance Co. of America, 124  NJ 338 (1991), and (2) to effect a change of beneficiary designation for life insurance, it is not sufficient to just consult with the insurance company or even with  an attorney, or to express the intention to make the change — the policy owner needs to take affirmative steps to submit the beneficiary designation in writing to the company.DeCeglia v. Estate of Colletti, 265 N.J. Super. 129 (App. Div. 1992), or at least to “substantially comply” with what the insurance company requires in order to change a beneficiary. Haynes v. Metro. Life Ins. Co, 166 N.J. Super. 308 (App. Div. 1979).

What’s the lesson?  Major life changes require us to update our estate plans, and estate plans require writings such as Wills and Beneficiary designation forms.

Careful planning can prevent a crisis. For legal advice on estate planning at all ages, call 732-382-6070


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