Issues Arising Out of Life Insurance Policies and Beneficiaries

By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Estate Planning and Probate Attorney

Gary and Sharon divorced in 1998.  Gary had two life insurance policies from Prudential and two from State Farm.  He also had a separate Met Life group term life policy. The judgment of divorce stated that Sharon was to remain the primary beneficiary of one third of the face value of all of his insurance policies.  They also agreed to designate the children as primary beneficiaries of all life insurance policies except for the Prudential and State Farm policies.

At the time of the divorce, Gary made Jeffrey and Christopher, the couple’s two adult sons, the primary beneficiaries under the two Prudential and one of the State Farm policies, leaving ex-wife Sharon as the beneficiary of the other state farm policy.

Gary’s son Christopher died unexpectedly.  In 2004, Gary married Donna. Once married to Donna, Gary removed Jeffrey and Christopher as beneficiaries of both Prudential policies and made Donna the primary beneficiary.  He designated Donna and Jeffrey as beneficiaries on one of the State Farm policies while ex-wife Sharon remained the beneficiary of the other State Farm policy.  Donna was designated as the only beneficiary of the Met Life Policy.

Once Gary passed, the proceeds of one State Farm policy were paid in full to ex-wife Sharon.  Donna and Jeffrey then filed legal claims for the two Prudential and the other State Farm policy.  The Met Life policy proceeds went to Donna.  Jeffrey argued that he was entitled to these proceeds as well.

The court had to decide the following issue: Whether the divorce decree’s obligation to name Jeffrey a beneficiary of Gary’s life insurance policy was temporary or permanent. The court reasoned that because there was no language limiting the duration of the beneficiary, the decree’s effect was permanent – Jeffrey was in fact a beneficiary.  After the court came to this decision, they ordered the parties to provide information to the court to determine how much of the benefits Jeffrey was entitled to receive.

What’s the bottom line here?  Divorce settlements are often not clear about many different things.  In this case, it was unclear about when the insured could change the beneficiaries under his existing life insurance policies.  The divorce paperwork also did not mention anything about what happens when one of the children die before the death of parent whose life insurance policy it is.

To make sure you don’t find yourself in a similar mess, make sure that if you become separated or divorced, all your important documents are reviewed and changed according to your new circumstances and goals.  Each state has different laws regarding these things, so each beneficiary designation must be specifically evaluated. Finally, the most obvious, but also the most important – always think twice about naming someone as a beneficiary of a life insurance policy.

To discuss your NJ Estate Planning and Probate Litigation matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at  Please ask us about our video conferencing consultations if you are unable to come to our office.