Dear Quentin,
My ex-husband has a $250,000 life insurance policy. I am 50 years old and have only $45,000 saved. When we divorced I made sure I would be the named beneficiary so I could have security as I got older and pass this on to my children, but he has informed my two children that he can no longer afford to pay the $200 per year due. monthly premiums, and they would have to pay them. He has also long threatened to change the beneficiary designation. Can he do that?
This is his way of undoing the promise and commitment he made when we divorced. I understood that our divorce agreement required me to remain a beneficiary of his life insurance policy – that’s how I remember it. I hoped, but never quite trusted, that he would follow through. 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,” MassMutual said. “It is important to have clearly defined conditions and responsibilities because it could be detrimental to the beneficiaries if the premiums are not paid. If you added your ex-spouse to the policy, you can request copies of billing information and lapse notices.”
People usually add a provision to say that the beneficiary cannot be changed without their permission. At the time of your divorce, you and your attorney should have clearly defined policy ownership, 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 policy prior to divorce proceedings.”
You don’t mention what type of life insurance your husband has. A term life policy has a term of ten to thirty years, and if your ex-husband were to survive that period, the policy would expire and the beneficiaries would receive no money. A whole life policy, on the other hand, has a cash value and is therefore more expensive than a whole life policy. Once a whole life policy has built up significant cash value, the insured can cash out or borrow against it.
It is not that unusual for a spouse to default on a divorce decree on a life insurance policy. The spouse can cancel the policy, replace it, or even change the beneficiaries. There are several problems here. First and foremost, it is your former spouse’s responsibility to pay for the life insurance policy, not make it the responsibility of his children. It is unfortunate, unfair and petty for him to put them in the middle of your dispute.
In Hillman vs. 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 have wanted his ex-wife, from whom he had divorced ten years before his death, to claim his life insurance policy. But the divorce decree did not matter because the document presented to the insurance company contained his ex-wife’s name.
State law varies
If your divorce decree was not clear about the beneficiary of your ex-husband’s life insurance policy, the outcome may depend on the laws of your state. Can a divorce decree set aside a life insurance policy? “Yes. If the policyholder is married and divorced in community of property, the ex-spouse may be entitled to a portion of the death benefit regardless of who the named beneficiary is,” according to Boonswang Law in Philadelphia.
About half of U.S. states — including Florida, Pennsylvania, New Jersey, New York, Texas, Massachusetts and Colorado — have some form of divorce revocation statute, under which an ex-spouse is automatically removed as a beneficiary of a life insurance policy after divorce. law firm adds. California law, meanwhile, excludes life insurance policies from automatic revocation upon divorce laws.
According to Carina Castañeda, an attorney in Manhattan Beach, California, a beneficiary of a life insurance policy for an ex-spouse in California will succeed, “unless the asset settlement or divorce decree specifically provides for a contrary outcome; the policyholder changes the designation of the beneficiary; an insurance contract invalidates the beneficiary designation in the event of divorce; [or] the ex-spouse legally relinquishes his interest in the policy.”
We all like to believe that former spouses will keep their word and perhaps act more honorably than they did during the marriage, whether it concerns child support, alimony, life insurance, or retirement accounts. But divorce doesn’t necessarily change people. In many cases, it can provide an opportunity for a former spouse to once again exercise the power he has to cause disruption in his ex’s life.
Your divorce attorney should be able to advise you on what action you can take based on the laws in your state and the exact wording of your divorce decree. Disputes between beneficiaries, as the above case suggests, can be extremely complex and challenging to win. They can also be extremely expensive if they ultimately have to go to a higher court and drag on for years. Your legal advisor can tell you whether 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. Will the home remain a separate property? What happens if I die?
‘He holds all the cards’: My mother, 86, has dementia. Her partner of 30 years is listed on the deed to her home. How can I take control of her finances?
I was bitten by a feral cat and my hospital money wiped out my savings. I am 50, single and without children. Should I cash out on my $12,000 life insurance policy?
