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Tuesday, December 20, 2005

You Be the Judge - Insurance and Divorce

It is time for a round of "You Be the Judge," this time dealing with a divorced husband who failed to change the beneficiary designation on his life insurance policy from his former wife.

FACTS. Husband and wife divorce. The marital settlement agreement described certain life insurance policies on the life of the husband and provides, "Husband shall receive as his own and Wife shall have no further rights or responsibilities regarding these assets." Ex-wife was named as beneficiary of the life insurance policies, and husband never bothers to change this after the divorce. Husband dies. A dispute arises whether the ex-wife waived her rights to receive the insurance proceeds at death, or whether she is still entitled to receive them.

DECISION: Ex-wife wins- she gets the insurance proceeds.

WHY: The Court acknowledges that under Florida law the ex-wife can waive her rights to receive the insurance proceeds as part of a divorce settlement, but that the settlement must specifically refer to rights to the "proceeds" of the policy to be an effective waiver. Since there was no such waiver of "proceeds" here, the ex-wife gets to keep the policy payout.

LESSONS? Make sure your marital settlement agreement specifically includes rights to insurance "proceeds" if a waiver is intended, and/or make sure the divorcing spouse files a change of beneficiary form to remove the former spouse. This is probably also good advice in regard to a prenuptial or postnuptial agreement.

Smith v. Smith, 30 Fla.L.Weekly D2845b (5th DCA 2005)

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