Beneficiary contested

[dct452]

What is the name of your state? Colorado

My brother died recently in Texas. Approximately one year ago, he told me that he had changed the beneficiary on his life insurance policy from his wife to me and anothet brother, so that we could take care of our families and our elderly mother. He did this because, for many reasons, he and his wife were quickly headed towards divorce. (though they never filed for divorce) Unfortunately, in the interim, he got very sick and died within a year. She mostly ignored him during his illness, constantly coming home from work very, very late, and generally treating him like an inconvenience as if she were just waiting for him to die so she could collect his insurance. (I realize this would be impossible to prove and really has no bearing on the case....it's just the reality of the situation). My brother died wanting to take care of his family of origin, and not the wife who apparently had nothing but contempt for him the last 2 years of his life. Since she learned of the change in beneficiary, she had been refusing to give us any information on his life insurance policy so that we couldn't file a claim. But now she and her attorney have contested the beneficiary change (though it was legal and approved by the insurance company). Basically, she wants and is demanding 75% of his life insurance benefits. She has threatened that we could either "play nice" or she would drag it, and us through the Texas court system.

My questions are: 1) Does she or her attorney have a right to contest the beneficiary change on this policy, and deny my brother's dying wishes to take care of his family? And, on what grounds is she able to contest this? 2) Doesn't the insurance company have a fiduciary responsibility to its policy holders and beneficiaries by disallowing this frivolous contest? 3) What are her chances of overturning this beneficiary change; what rights do we have here, and what would be the best course of action without dragging this through the court systems? This feels very much like we are being blackmailed, and they are illegally holding up our right to due process of this claim. There were many very valid and personal reasons why my brother changed the beneficiary on his life insurance policy, and I feel compelled to honor his wishes without giving in to her demands.

 

[ALawyer]

You called it right - you are being threatened with protracted litigation and the costs involved in order to force you to share the proceeds with the evil ex-sister-in-law.

In America anyone can sue anybody for anything. The lawyer, by signing the pleading, is supposed to vouch that it is, to the best of his or her knowledge, a bona fide claim -- not necessarily a winner but just one that is reasonable. And it is possible that in some circumstances (lack of mental capacity at time of beneficiary change; a claim that the policy was community property, or community property assets were used to pay premiums; fraud or mistake; other spousal rights, etc.) the spouse's claim would be valid.

The insurance company, when faced with litigation, will do the only smart thing for it to do, so it will not risk having to pay the proceeds twice -- once to the beneficiary and once to the wife.

It will pay the money into court in what is known as an interpleader, and then let the claimants fight it out in court. Simple.

You need a lawyer to evaluate the facts and circumstances, to see if s/he can bluff or talk the other side into a settlement that will be cheaper than litigation, and see if there may be some way the claimant can be dissuaded from objecting, such as having to pay your exenses if he loses, or even to have the lawyer become subject to professional disclipline if s/he persists in meritless claims. But look, litigation can have strange results. For example I can't understand why OJ is walking the streets today.

 

[BelizeBreeze]

Unfortunately, I have to agree. However, there is some homework you need to do before deciding. The most important being determining when the policy was purchased. Texas is a community property state therefore, if the policy was purchased before the marriage, it is separate property, even if the beneficiary was changed to the wife during the marriage.

Another point to ponder is whether or not the amount of the policy is worth fighting over. If it's less than $350,000 thent it's probaly not worth the fight. However, that still doesn't mean the wife should get 75%.

Offer her a 33.3% share and tell her that if she's not happy with that then please file. She too, will have to expend thousands of dollars and years of her life to take this all the way. That gate works both ways.