Ex wife Inherits, How Can This Be Fair?

Over the course of my career, I have delivered three life insurance death claims to an ex-wife. I am not making any judgement calls as the whether or not this was fair, or if karma was at work. Nevertheless, how does this happen?

Let’s take a look at the case of Moore v. Moore 266 Mich App 96 (2005).
Hetta and Clark divorced in 1999. As a part of the marital settlement agreement Hetta waived her rights to Clark’s life insurance and retirement plans. Clark did not change his beneficiaries with his retirement plan or the insurance company. When he died, Hetta received the benefits. Clark’s intended heirs sued and lost; they then filed an appeal and lost again.

Why didn’t their Marital Settlement Agreement take care of this? Because neither the insurance company nor the plan administrator knew that Hetta waived her benefits. Under ERISA (Employment Retirement Income Security Act of 1974) the administrator has to adhere to the paperwork that Clark had on file. Similarly, the insurance company had a contractual obligation to pay the life insurance proceeds to the beneficiary on record. Since Clark never changed his beneficiary, Hetta was legally entitled to the benefits.

Please make time this summer to sit down and do a beneficiary review if you:

  • Are not absolutely certain who is listed as your beneficiary
  • Had a death, divorce, or birth in the family
  • Have recently divorced
  • Have an IRA, annuity, life insurance, or company retirement plan

I realize that this may not be the most adventuresome thing on your summer to-do list, but it is periodically necessary. It’s important to look at this every few years, and even more vital if you have undergone a recent life change.

If you would like help or have questions, please do not hesitate to reach out. We are happy to help.

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