If you’re planning on getting divorced, it’s a very good idea to change your life insurance beneficiary if you don’t want your soon-to-be-ex to still receive the benefits. It’s risky to assume your ex will automatically be disinherited upon divorce, as a recent ruling from South Carolina illustrates.
Married couple John McMeeking and Candace Murphy separated in 2010. At some point before their divorce became final, an order was issued resolving their marital debt as well as custody and support issues regarding their children. The divorce became final in March 2014.
Shortly before that occurred, South Carolina’s legislature passed a state law disqualifying a former spouse from receiving his or her ex’s life insurance proceeds unless they specifically agreed otherwise.
John passed away in 2015. His life insurance policy still listed Candace, now his ex-wife, as a beneficiary, with his brother as an additional beneficiary. The insurer and John’s brother argued in court that the new law should apply because it was passed before the couple’s divorce became final. As a result, they argued, the brother should get the $100,000 (although the brother made it clear he planned to use the money for the benefit of the couple’s children).
Candace, however, argued that while the divorce was officially not final at the time, the order resolving their debt, custody and support issues — in other words, everything that needed to be decided in the divorce — counted as a “divorce” for purposes of the new law. Since that order was issued before the new law passed, she said, the new law shouldn’t apply and she should get the $100,000.
A federal judge agreed. So, if you don’t want to leave issues like this up to the whim of a judge and you plan on divorcing, talk to a family lawyer as soon as you can to identify all the “i’s” you have to dot and all the “t’s” you have to cross.