Beneficiary Disputes – New York

Eric Dinnocenzo is an attorney who handles New York life insurance beneficiary disputes. There are many different types of life insurance beneficiary disputes in New York. Some of the most common ones are highlighted below.

Divorced Spouses

Beneficiary disputes can arise after a divorce when the insured spouses dies and the former spouse was not replaced as the life insurance beneficiary.

However, New York has enacted a law that prevents a former spouse from receiving the death benefit, unless certain conditions are met. This law is referred to as a Divorce Revocation Law and can be found at Estates, Powers and Trusts Law § 5-1.4. It states, in relevant part:

Except as provided by the express terms of a governing instrument, a divorce … revokes any revocable (1) disposition or appointment of property made by a divorced individual to, or for the benefit of, the former spouse, including, but not limited to, a disposition or appointment … by beneficiary designation in a life insurance policy

This statute functions to automatically remove the former spouse as beneficiary upon the entry of divorce. In effect, the law treats the former spouse as if he or she had predeceased the insured.

However, the statute provides an exception so that the former spouse can receive the death benefit under certain circumstances. Most commonly, a divorce decree, marital settlement agreement, or court order will require one spouse to maintain a life insurance policy to serve as security for alimony payments to the other spouse in the event of death. In that case, the former spouse will have a right to some or all of the death benefit even though there has been a divorce.

Undue Influence, Mental Capacity, Fraud and Duress

It is important to have a knowledgeable New York life insurance beneficiary dispute lawyer on your side when there are claims that a beneficiary change was made as the result of improper conduct.

Undue Influence: there are New York life insurance beneficiary disputes where it is alleged that the insured made a beneficiary based on the undue influence of another person. The legal requirement for undue influence is that another person improperly influenced the insured to make a beneficiary change that he or she would otherwise not have made.

Mental Capacity: a person lacks mental capacity if he or she does not comprehend the nature of a transaction. A typical example is an insured who is suffering from illness or is on medications so that he lacks understanding that he is signing a form that will change his life insurance beneficiary. A beneficiary change is invalid if made when the insured is not of sound mind.

Fraud: a fraudulent beneficiary change results when another person intentionally misleads the insured to sign a beneficiary change. An example would be if the person falsely tells the insured he is signing a medical authorization when it is actually a beneficiary change form.

Duress: a beneficiary change is the result of duress when an insured is forced to make a beneficiary change in the face of a meaningful threat from another person.

Whether the Beneficiary was Changed

Beneficiary disputes can involve whether the beneficiary was in fact changed, or if the life insurance company was negligent and failed to process the change.

In New York the doctrine of substantial compliance often comes into play in the former situation. Even if the insured failed to satisfy the formal requirements under the policy for a beneficiary change, the courts will treat it as changed under certain circumstances. This can occur if the insured had the intent to change the beneficiary prior to death but was thwarted or prevented from doing so or otherwise was unable to carry out all the necessary requirements.

Forgery

Some beneficiary changes may be the result of forgery. Under these circumstances, the last-named beneficiary may not be allowed to recover the death benefit. We have worked with expert forensic handwriting analysts to determine whether a signature is real or forged.

Slayer Laws

In some cases, the life insurance beneficiary is a suspect in the insured’s death. In virtually all states, there exist what are called “Slayer Laws” that legally prohibit a person responsible for the intentional killing of a life insurance policyholder from recovering the death benefit. The New York Slayer Law was enacted by an 1889 court decision entitled Riggs v. Palmer.

In these cases, the claimants for the policy must litigate the issue of whether the beneficiary intentionally killed the insured—mirroring what happens in a criminal case, but subject to a lesser standard of “preponderance of the evidence” instead of the criminal standard of “beyond a reasonable doubt.”

Eric Dinnocenzo is a New York life insurance beneficiary dispute attorney who has successfully litigated these controversies. You can call him at (212)933-1675 for a free consultation.