Beneficiary Disputes – New Jersey

Eric Dinnocenzo is a New Jersey life insurance beneficiary dispute attorney who has handled various types of controversies arising when two or more persons are fighting for the same death benefit. Below are some of the scenarios we have been involved with.

Divorced Spouses

Disputes often occur when an individual has divorced and has not updated their life insurance beneficiary designation to remove their former spouse. New Jersey’s Divorce Revocation Law, detailed in N.J.S.A. § 3B:3-14, automatically revokes the ex-spouse’s beneficiary status upon divorce, unless specific conditions apply. This legislation aims to address the common oversight where divorced individuals neglect to alter their beneficiary designations.

Nevertheless, exceptions exist where a former spouse may still be entitled to benefits, particularly if mandated by a divorce decree, marital settlement agreement, or court order to secure alimony payments with life insurance. In such cases, the ex-spouse retains rights to the death benefit, although they may not receive the full amount if it exceeds the remaining alimony obligations that the life insurance policy was intended to secure. One of the first New Jersey court cases to address this issue was Konczyk v. Konczyk, decided in 2003. In all cases, the language of the divorce papers is of critical importance.

If a divorced individual prefers to maintain their ex-spouse as the beneficiary, they must explicitly re-designate them.

Undue Influence, Mental Capacity, Fraud, and Duress

As a New Jersey life insurance beneficiary dispute lawyer, Eric Dinnocenzo has litigated cases involving alleged improper conduct relating to the appointment of a policy beneficiary.

Undue Influence: beneficiary disputes may arise if a beneficiary change was caused by undue influence. This occurs when someone improperly persuades the insured to change the beneficiary designation against their will.

Mental Capacity: a lack of mental capacity can invalidate a beneficiary change if the insured does not understand the nature of the transaction, often as a consequence of illness or medication or a mental health condition.

Fraud: a beneficiary designated can be overturned due to fraud, which occurs when a person intentionally deceives the insured into signing a beneficiary change form by misrepresenting its true nature or purpose. For example, fraud would occur if someone tells the insured that he is signing a medical authorization form when he is really signing a life insurance beneficiary change form.

Duress: duress involves situations where the insured is compelled to make a beneficiary change under threat.

Verification of Beneficiary Changes

Disputes can also center on whether a beneficiary designation was actually made in compliance with policy terms and conditions, or if the insurance company failed to process the change properly. In the former case, the doctrine of substantial compliance may apply. If the insured intended to make a change and took reasonable steps to do so but faced obstacles beyond their control, the courts may recognize the change despite non-compliance with formal policy requirements. These disputes are extremely fact-intensive about what the insured did or did not do and the surrounding time period.

Forgery

Certain beneficiary designations may stem from forgery, leading to potential denial of the death benefit to the named beneficiary. Forensic handwriting analysis may be employed to verify the authenticity of signatures.

Slayer Laws

In instances where a beneficiary is suspected of causing the insured’s death, “Slayer Laws” may prevent that individual from receiving the death benefit. New Jersey’s Slayer Law, codified in N.J.S.A. § 3B:7-1.1, mandates legal proceedings to determine if the beneficiary intentionally caused the insured’s death, following a lower standard of “preponderance of the evidence” rather than the criminal standard of “beyond a reasonable doubt.” If the beneficiary intentionally caused the insured’s death, he will be removed as beneficiary. In fact, the New Jersey Slayer Law is written to prevent the killer’s relatives from receiving a life insurance death benefit.

If you would like to speak with a New Jersey life insurance beneficiary dispute attorney about your case, you can contact the Law Offices of Eric Dinnocenzo at (212) 933-1675 for a complimentary consultation.