Question about changing beneficiary

[selfgen]

My client purchased a 30 year term policy with $1 million face amount. He got it because he had a wife and 4 young children. His wife is currently the sole beneficiary. The oldest child is now 25 and another is 19 years old. My client says now he would like to add them as beneficiaries, so that they can get a share of the proceeds directly , now that they are adults. When he mentioned this to his wife, she got very upset, took it personally, as if he didn’t trust her. ( she has a gambling addiction ). The client is the owner of the policy and the insured. Spouse is the lone beneficiary. Can he change the beneficiary designation without his wife’s consent?

 

[scagnt83]

My client purchased a 30 year term policy with $1 million face amount. He got it because he had a wife and 4 young children. His wife is currently the sole beneficiary. The oldest child is now 25 and another is 19 years old. My client says now he would like to add them as beneficiaries, so that they can get a share of the proceeds directly , now that they are adults. When he mentioned this to his wife, she got very upset, took it personally, as if he didn’t trust her. ( she has a gambling addiction ). The client is the owner of the policy and the insured. Spouse is the lone beneficiary. Can he change the beneficiary designation without his wife’s consent?

Depends on the state.

Look at the state specific beneficiary change form, it will say. I believe in LA she would need to sign a consent form.

It might be possible to bypass that with a trust. But she could probably go to court and fight it. In joint property states spouses can sue for half the DB if they were excluded without consent.

 

[Fire]

I’ve seen that in some states . That’s crazy . What about in a divorce ? My ex wanted me to make her the owner of 1 of my policys and give it to her in divorce . I used some very choice words .I can understand somebody age 75 and above as somebody can trick them . If I were in a state like that I simply drop the policy before letting my ex collect a penny .

 

[DHK]

Can he change the beneficiary designation without his wife’s consent?

Yes, he can. And, based on spendthrift history of his wife, I'd have an irrevocable trust set up for that purpose for her support and have a corporate trustee manage it.

If something were to happen to his wife before him, then the contingent beneficiaries can be his adult children.

Of course, this is just for a term policy, right? If the policy won't be converted, there's little reason to go through the expense of trusts and corporate trustees unless you're going to guarantee the payout.

 

[adjusterjack]

Depends on the state.

Look at the state specific beneficiary change form, it will say. I believe in LA she would need to sign a consent form.

In states that require spousal consent to change beneficiaries it's likely to apply to any type of beneficiary account (IRAs, 401(k)s, bank accounts, investment accounts, etc).

 

[scagnt83]

Yes, he can.

Not in all states he cant.

 

[scagnt83]

I’ve seen that in some states . That’s crazy . What about in a divorce ?

Then they wouldnt be the spouse anymore and the law would not apply.

However, many divorce settlements cover life insurance policies and its not uncommon for a policy to be kept in place for the ex-wife during the duration of alimony being paid.

 

[Allen Trent]

However, many divorce settlements

Sadly, most people rush to save money on lawyer fees & don't address beneficiary language of policies & accounts after splitting who gets what. I actually think it is the exception & not the rule that a divorce decree calls it out & people end up with the generic state divorce decree language that is silent & voids any & all future rights to be a beneficiary or owner unless an update form is submitted post divorce naming the former spouse specifically

 

[Allen Trent]

In states that require spousal consent to change beneficiaries it's likely to apply to any type of beneficiary account (IRAs, 401(k)s, bank accounts, investment accounts, etc).

The 10 or so community property states would require it on life insurance purchased after the marriage

 

[scagnt83]

The 10 or so community property states would require it on life insurance purchased after the marriage

And even if the policy was before the marriage, community property states allow the spouse to sue for rights to 50% of the DB even if not listed as bene.

Logic is that they are 50% owner of the policy. And if they want themselves as 50% beneficiary they have the legal right to do so. Its happened before in courts and succeeded..