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Court: Man's ex will collect money from life insurance, not wife

In this blog, we have often discussed the importance of updating estate plans and reviewing beneficiaries from time to time. In general, people in Massachusetts will want to review their estate plans after a significant life event such as a marriage, divorce, birth of a child or death of a loved one.

These events can often change the terms that have been set in an estate plan or will. Without updating these documents, there can be some unexpected and undesirable decisions that are made after a person has passed away. Many times, these decisions are made in a courtroom and may not accurately reflect a person's intentions. 

Recently, a court had to step in and make a decision on behalf of a man who passed away. He had been married and divorced, then he remarried but parts of his estate plan were challenged after the second wife learned that he had not updated his beneficiary designation in an insurance program.

Because he had not updated his beneficiary to his new wife, he ex-wife was still assigned as the beneficiary to money from a federal group life insurance program. There was a challenge to designation because in the state where this occurred, the laws state that current spouses are favored in disputes of beneficiary designation.

However, the state Supreme Court stepped in and ruled that federal laws override state laws. In this case, that meant that because the ex-wife's name was listed as a beneficiary on the insurance form, she would be the one to collect the money.

This situation highlights the importance not only of updating estate plans and beneficiaries, but also of how crucial it can be to seek legal support when creating, revising or executing the terms of a plan. 

Source: The Huffington Post, "Supreme Court Life Insurance Decision: Virginia Man's First Wife, Not Second Wife, Gets The Money," June 3, 2013

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