Think your separation agreement ensures your ex won’t get your insurance payout? Think again.
While married, Jack named his wife, Sharon, as the beneficiary of his life insurance policy. Some years later the couple separate. They negotiate and sign a separation agreement which states that neither of them will have any claim against the other’s estate. Jack does not change the beneficiary on his life insurance policy thinking it has been dealt with by the separation agreement. Jack dies. The insurance company pays the insurance payout to the named beneficiary, Sharon.
How could this happen? The life insurance is not payable to Jack’s estate but to a named beneficiary (his ex-wife, Sharon). It is, therefore, not part of Jack’s estate and is not dealt with by the separation agreement.
How could this have been avoided? Jack could have signed a new beneficiary designation form and provided it to the insurer. If the insurance policy were privately-owned and not part of a group plan, Jack could have named a new beneficiary in a Will.
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Blog posts pre-dated December 1, 2015 were originally published under Neff Law Office Professional Corporation.
