Should Divorce = Automatic Forfeiture of Life Insurance Benefits?
I previously wrote here about a case where an ex-spouse was the windfall beneficiary of insurance benefits because her ex had the audacity of dying after their divorce but before getting around to revising his insurance beneficiary designation forms (it's always the little things that get you!). This outcome probably seemed unfair to many (except the ex), including Stetson Law student Suzanne Soliman, who just published A Fair Presumption: Why Florida Needs a Divorce Revocation Statute for Beneficiary-Designated Nonprobate Assets, in 36 Stetson L. Rev. 397 (2007). Here's an excerpt:
Like many Americans, Floridians invest significantly in beneficiary-designated nonprobate estate planning tools such as life insurance. These types of assets comprise the bulk of many Floridians' estate plans because they are easy to obtain and, in many instances, affordable compared to other estate planning tools. It is important to effectuate the policyholder's intent, particularly because so many families trust that these assets will provide some degree of security. Enacting a divorce revocation statute to protect nonprobate assets will provide protection and security for many Florida families.
Special thanks to the Wills, Trust & Estates Prof Blog for posting here on this article.
I was fortunate enough to hear Suzanne present her work to the Law Review at a luncheon in the early stages. She is very sharp. Her suggestion also includes IRA's which are becoming one the bigger assets in many estates. Kristen Lynch, who charis the RPPTL commitee on IRA benefits said the section will be working on this, so we could very well see some proposed legislation.
Beneficiary designations always scare me because they can be changed without the execution formalities of a will, sometimes using a power of attorney. They are ripe for undue influence. Because beneficiary assets are not probated, interested persons might not ever find out about the asset and the undue influencer gets away with the loot.
All this gives us even more to think about in the planning stages.