Many surviving spouses receive an unpleasant surprise when they attempt to collect on their deceased spouse’s life insurance policies. Often, a former spouse or the former spouse’s children are legally entitled to the proceeds because the deceased person never updated his beneficiary forms.
In Florida, this accidental (or negligent) result was addressed in 2012 with a new statute. Basically, it says that if the beneficiary designation was made before the divorce, the former spouse is treated as having predeceased the policy owner. But that doesn’t always solve the problem, and may even create other problems.
If the primary beneficiary predeceases the policy owner, then the contingent beneficiaries (perhaps the former spouse’s children) will receive the proceeds. That may not sit well if the deceased policy owner also had children with his current spouse. Or, if no contingent beneficiaries were named, the proceeds will likely be paid to the deceased person’s estate. Hello, probate.
Also, our state law is preempted by federal law. Many federal and military group life insurance policies pay proceeds only to the beneficiaries named on the last form the company received from the deceased policy owner, regardless of marital status or state law. The U.S. Supreme Court upheld this treatment in 2013 in Hillman v. Maretta.
Protect your family. Review your beneficiary designations on your life insurance policies at work and at home annually, or at the very least, any time you have a life change: marriage, divorce, deaths, and births/adoptions. Keep a copy of all current signed beneficiary designations in your files with the rest of your estate planning documents. Your family will thank you.