My Dad had a life insurance policy taken out in 2002 with my mom listed as the beneficiary. They divorced in 2006 and he never changed the beneficiary. Does the payout go to the kids or is it for-fitted?
An insurance policy is a contract between the insurance company and the insured, and the insurance company will pay the benefit to the named beneficiary regardless of any personal issues between the insured and the beneficiary. In other words, unless your dad changed the beneficiary designation on the insurance policy following the divorce, the insurance company would be contractually obligated to pay the benefits to your mom.
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Jared A. Kartchner
J Charles Ferrari
Eng & Nishimura
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With all due respect to my fellow colleagues who have responded to your question, there answers may be incorrect.
In the event of divorce, Section 20-111.1(A) of the Code of Virginia provides that any revocable beneficiary designation contained in a then-existing written contract owned by one party that provides on the payment of any death benefit to the other party is revoked. It is my understanding that the effect of this provision is that even where the parties to a divorce agree that the former spouse shall remain as a beneficiary on an existing life insurance policy, that designation is terminated by operation of law upon entry of the divorce and a post-divorce redesignation would need to be made in order for the former spouse to receive the life insurance proceeds as agreed to.
There is now an exception to the above rule in the case of beneficiary designations subject to pre-emption by federal law (such as Federal Employees Group Life Insurance benefits) as the result of a Virginia Supreme Court decision that came down in January of 2012. The case is Maretta v. Hillman (from the Fairfax County Circuit Court, Civil Case No. 102042).
Accordingly, you should probably consult with your own attorney about this matter to determine whether the designation terminated in 2006 (per Va. Code 20-111.1(A)), remained in effect due to an exception (such as federal law pre-empts state), and/or whether there was any other provision of your parents' divorce settlement and/or final decree that would change might effect the answer to your question. If the designation did terminate by operation of law, however, I believe the default is that the proceeds would revert to your father's estate and then be paid out according to the residuary clause of his Will or (if no Will) in accordance with the law of intestate succession.
Caveat: all of the above information assumes that the parties divorced in Virginia and that father died in Virginia.
This response does not create an attorney-client relationship and is intended for general information purposes only.
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