Divorce settlements and final judgments often include provisions requiring one spouse to name the other spouse and/or children as beneficiaries of a life insurance policy. But what happens if the insured fails to name the other spouse and/or children as beneficiaries or later changes the beneficiary designation, naming someone else in violation of the judgment? The general rule is that a divorce judgment can override a conflicting beneficiary designation, but the terms of the divorce judgment must be fully analyzed and enforcement usually requires court action after the insured’s death.

A divorce judgment and property settlement agreement is a legally binding order and contract. If it requires a spouse to name a specific beneficiary of a life insurance policy, then that obligation remains in effect unless modified by the court. Life insurance companies, however, generally pay proceeds based on the beneficiary designation on file at the time of death. Life insurance companies are not necessarily responsible for enforcing divorce judgments or investigating whether a designation violates a court order. As a result, it is important to place the life insurance company on timely notice if a spouse or child should have been named the beneficiary pursuant to a divorce judgment. If given timely notice, the insurance company will typically file an interpleader lawsuit, so that a court may determine the proper beneficiary entitled to the death benefits.

If you believe life insurance proceeds may be wrongly paid to someone else in violation of a divorce judgment and property settlement agreement, please contact Joel Ewusiak for legal help.