How to Exclude a Spouse as a Beneficiary of Life Insurance – In states with community property, spouses can write a “property status agreement” that allows them to remove their life insurance from marital property and name someone other than their spouse as the beneficiary.
- The insured’s spouse or previous spouse will not be entitled to the death benefit if they are not listed as the beneficiary.
- In states with equitable distribution, a married insured can name anybody as his life insurance beneficiary.
- If the insured is required by court order to keep life insurance to safeguard child support, spousal support, or alimony, he must identify his former spouse, the support obligee, as the beneficiary.
If he fails to do so, his insurance is likely to be the subject of a beneficiary dispute in which the support recipient will succeed.
A spouse who is named the beneficiary of a life insurance policy would ordinarily be: a creditor beneficiary.
Who may be a life insurance policy’s beneficiary?
Does the Surviving Spouse Become the Beneficiary of a Life Insurance Policy Automatically? – Typically, the insurance itself does not stipulate that only a spouse may be nominated as the beneficiary. The policyholder has the discretion to pick any beneficiary.
Similarly, the policyholder has the option to alter their designation. However, if the policyholder decides to choose an irrevocable beneficiary, he or she will not be able to withdraw or change this choice in the future. In contrast, revocable designations can be modified simply. A beneficiary change or designation must be made in accordance with the terms of the life insurance policy and must be received, authorized, and recorded by the insurance company for it to be legal.
When a court ruling, such as a divorce decree, obligates the policyholder to select a certain individual as the beneficiary, the policyholder may also be prevented from picking the beneficiary. For instance, if the divorce decision requires the husband to carry a $250,000 private life insurance policy for the benefit of his children, the husband cannot remove the children as beneficiaries and name someone else.
However, this restriction does not automatically apply to plans such as SGLI, VGLI, and FEGLI. The individual who intends to pursue such a divorce duty must notify the insurance company and ensure that the designation is irreversible. A life insurance policy also specifies what occurs if there is no designated beneficiary.
In many plans, the surviving spouse automatically receives the life insurance payments in the absence of a designated beneficiary. In other cases, the money goes to the insured’s estate. When there is no beneficiary, it is typical for the insurance company to establish the order of precedence governing who has the right to receive the funds.
What happens to a deceased spouse’s life insurance proceeds?
Does the Surviving Spouse Become the Beneficiary of a Life Insurance Policy Automatically? – Typically, the insurance itself does not stipulate that only a spouse may be nominated as the beneficiary. The policyholder has the discretion to pick any beneficiary.
- Similarly, the policyholder has the option to alter their designation.
- However, if the policyholder decides to choose an irrevocable beneficiary, he or she will not be able to withdraw or change this choice in the future.
- In contrast, revocable designations can be modified simply.
- A beneficiary change or designation must be made in accordance with the terms of the life insurance policy and must be received, authorized, and recorded by the insurance company for it to be legal.
When a court ruling, such as a divorce decree, obligates the policyholder to select a certain individual as the beneficiary, the policyholder may also be prevented from picking the beneficiary. For instance, if the divorce decision requires the husband to carry a $250,000 private life insurance policy for the benefit of his children, the husband cannot remove the children as beneficiaries and name someone else.
However, this restriction does not automatically apply to plans such as SGLI, VGLI, and FEGLI. The individual who intends to pursue such a divorce duty must notify the insurance company and ensure that the designation is irreversible. A life insurance policy also specifies what occurs if there is no designated beneficiary.
In many plans, the surviving spouse automatically receives the life insurance payments in the absence of a designated beneficiary. In other cases, the money goes to the insured’s estate. When there is no beneficiary, it is typical for the insurance company to establish the order of precedence governing who has the right to receive the funds.
Are life insurance policies considered marital property in states with community property? – Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are community property states. In Alaska and Tennessee, community property rules are discretionary.
In some instances, if you reside in a community property state, community property rules may overrule the beneficiary choice on a life insurance policy. Since both spouses receive an equal portion of any income made during the marriage, any property acquired with that revenue is owned equally by both partners.
If a life insurance policy was acquired with community property income (if premiums were paid with community property funds), the surviving spouse may pursue a claim for half or a portion of the earnings if a beneficiary other than the spouse is named.
- The remainder will be given to the recipient.
- The community property law may not apply if the deceased got life insurance through his or her employment.
- Group benefit programs are frequently governed under ERISA (the Employee Retirement Income Security Act of 1974).
- ERISA is a federal legislation that preempts state laws such as state rules governing community property.
This implies that if the surviving spouse is not identified as the beneficiary of the employer-provided life insurance policy, he or she may not be entitled to half of the death payment. This topic is elaborated upon in our blog post on ERISA preemption.