Tom McCutheon
I read two different summaries of all of the civil cases decided by the Alabama Supreme Court and the Court of Civil Appeals every week. I do this in an effort to stay current on the law and hopefully, be the best lawyer for my clients.
Last week I read a case that surprised me and I want to tell you about this decision and the law that it contains as I was not aware of this.
In Kowalski v. Upchurch, decided 7/17/15, the court reaffirmed the proposition that if a spouse is named on an insurance policy as the beneficiary and the parties later divorce, even if the divorce contains the following language: “All items of personal or real property in the insured’s name or belonging to the her, including, without limitation . . .retirement plans, IRA, business interests, partnerships insurance policies, shall be her sole property and the [former] husband is divested of any interest therein.” The former spouse still collects the money.
What this means is that if you have named your husband or wife as the beneficiary of your insurance policy and you later get a divorce and don’t change the beneficiary on the policy, when you die your ex will get your life insurance proceeds.
In some cases where there is still a relationship because of children and the former spouse is trustworthy enough to make sure the money goes to the kids that may be fine. In other cases the very thought of the ex spending that insurance money on their new spouse could make someone turn over in their grave at a considerable RPM.
What surprises me about this case is that the language of the divorce specifically addresses the life insurance policies and states that they are the property of the spouse who took out the policy and not the former spouse and you would think that language that specific would accomplish that goal. It does not.
This case notes that divorce by itself does not affect the spouse’s right as the named beneficiary of the other spouse’s insurance policy unless a clause in the policy conditions those rights upon the continuance of the marriage. That rule stems from the fact that a beneficiary’s rights to proceeds from an insurance policy arises from a contractual obligation, not a marital one.
Buckle up and drive safely.
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Florence, AL 35630
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