Washington Attorneys Handling Term Life Insurance Policies for Divorcing Couples
In the difficult days of negotiating the end to a marriage, both spouses can feel overwhelmed by the many issues that must be addressed. Particularly if there are disagreements regarding custody and visitation of children or the division of marital assets, other issues that seem less pressing can sometimes be pushed to the side and even forgotten. All too often, this is the case with term life insurance policies that may be in place to insure the life of one spouse or the other.
Because term life policies tend to have little, if any, investment value, the spouses may not give them the attention needed. What happens in Washington State if the marriage is dissolved and the former spouse is still designated as the beneficiary of an insurance proceeds? In the event of the death of the insured, do the proceeds go to the former spouse?
Washington State Has a Special Statute
Recognizing the importance of addressing the issue of post-divorce insurance policies, the Washington State legislature enacted a special statute to cover most of the issues. RCW 11.07.010(2)(a) generally provides that if Spouse A has an insurance policy on his or her life that designates Spouse B as the beneficiary, then, in the event the marriage is dissolved or invalidated, Spouse B is no longer considered such a beneficiary. As the statute rather indelicately states, it is as if Spouse B “died at the time of entry of the decree of dissolution.”
Secondary Beneficiary
If the life insurance policy designates a secondary, or contingent, beneficiary, the proceeds would pass outside probate to that person (or trust, or other entity) so named.
Exceptions to the Usual Rule
As with most rules, there are exceptions. They include the following:
- Where the life insurance policy was “owned” by Spouse B. Legal issues regarding life insurance can be quite complex. In a nutshell, with life insurance policies, there are three important “persons” – (a) the person whose life is insured; (b) the beneficiary; and (c) the owner of the policy. In many cases, the owner and the person insured are the same, but that need not be the case. If, for example, a wife purchased a life insurance policy on the life of her husband, naming herself as beneficiary, then a subsequent divorce would not affect her interest in the policy at all.
- Where the life insurance policy is part of an employee benefit plan through Spouse A’s employer. If the couple has life insurance through the employer – quite a common occurrence – the person designated as beneficiary of the policy will receive the proceeds in spite of the fact that the couple may have divorced after the issuance of the policy. The only way to change this is to complete the required change of beneficiary forms with the employee benefit plan administrator.
- Where a court order provides otherwise. If the decree of dissolution or an order of child support requires Spouse A to maintain life insurance for the benefit of Spouse B, the pre-dissolution designation of Spouse A is not revoked upon divorce.
Life Insurance is Important to the Divorce Process
Handling life insurance appropriately is an important part of the divorce process. This is true even for term life policies that have no cash or investment value. Insurance can be vital to protect the financial interests of children born of the marriage. The road ahead can be tough enough for them, with the additional burden of having no financial backstop should one of the parents die unexpectedly. Spouses in a divorce should work with their family law attorneys to assure that necessary beneficiary changes are made.
Seek Experienced Legal Counsel
If you are contemplating divorce, it is crucial that you have a compassionate, skilled, experienced divorce attorney at your side. Blado Kiger Bolan, P.S. has more than 30 years of combined experience providing quality legal services to individuals throughout the Pacific Northwest in difficult moments, such as the breakup of a marriage. Our firm’s smaller size allows us to communicate better with our clients to serve your needs in the most efficient, time-sensitive manner possible. If there’s a simple solution, that’s our first choice. We work closely with you to resolve matters quickly and economically. Contact us on the web or call our office at 253-272-2997.
