Signed, sealed but not delivered, beneficiary form doesn’t count

There are no details about why this happened, but it is easy to imagine that it was a simple mistake. Unfortunately, it was a mistake that cannot be fixed. It is also a mistake that cannot be undone by a provision in a will.

We are talking about a life insurance change of beneficiary form that a husband filled out in November 2010. The form clearly indicated that his wife and only his wife was the beneficiary of the policy. The problem is that no one mailed the form to the insurance company. Had it been returned within 30 days, as stipulated in the policy, the woman would have received the proceeds when the insured died just a few months later.

The woman filed a claim when her husband died, and the insurance company denied it. The proceeds were distributed instead to the named beneficiary on the policy.

Neither did she prevail on appeal. She showed the insurer the completed but unfiled form, and she also pointed to a clause in her husband’s will that named her as his sole heir, stating that she was to get everything, including the payout from the life insurance.

The second denial sent the woman to court for relief. The court found for the insurance company, noting that the insurer’s denial was reasonable, given the policy requirement that the change of beneficiary form be filed within 30 days.

The court also noted that the will’s statement about the life insurance policy was immaterial. Life insurance is a non-probate asset — that is, in fact, one of the advantages of including life insurance in an estate plan — and a will has no authority when it comes to non-probate assets.

The 8th U.S. Circuit Court of Appeals agreed with the lower court and the life insurance company: The will could not change the policy beneficiary. This decision, though, also pointed out that the life insurance proceeds could have been part of the estate if the estate had been a named beneficiary.

Again, we don’t know the exact circumstances that led to the form not being filed, and we are reluctant to second guess anything that the couple did in the months leading to the husband’s death. What we will do, however, is to remind people to review their estate planning documents annually and to include any life insurance policies or retirement funds in that review. If it is a stressful time, it may be helpful to consult with an attorney for help with the details.

Source: Courthouse News, “Signed but Never Filed Form Won’t Help Widow,” Joe Harris, May 12, 2014

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