Brenner answers questions about all aspects of family finance.
My ex-husband forgot to remove my name as beneficiary on a life insurance policy. Sixteen months before his death, he remarried. The insurer informed me that the new wife is entitled to the insurance money according to New York State law. Why doesn't it go to his estate and/or his children?
It sounds as if you didn't get a full explanation. Under New York law, divorce automatically revokes beneficiary designations to an ex-wife or ex-husband. But the law doesn't say who gets the money instead. It says the insurer should proceed as if the beneficiary had predeceased the insured person.
When the designated beneficiary is dead, the new beneficiary's identity depends on the policy's "succession of interest" language. This typically calls for payment to a contingent beneficiary or to the insured's estate, says Michael Mullarney, a Northwestern Mutual Life Insurance Co. financial adviser in New York City. But Mullarney says in the circumstances you describe, Northwestern Mutual would ask to see a copy of the divorce decree before determining how the policy proceeds should be paid. The reason: Divorce settlements often ensure the continuation of alimony or child support payments by stipulating that the decedent's former spouse and/ or children are to receive his or her insurance policy benefits.
If your divorce settlement had no such provision, this policy may indeed have been payable to your ex-husband's estate under its "succession of interest" rules. And his will may have left the estate to his widow. When a person dies without a will, the law divides his estate between his surviving spouse and children. But there's no law requiring a parent to include his children in his will.
The bottom line In New York, divorce automatically cancels life insurance policy beneficiary designations, but they can be maintained as part of a divorce settlement.
TO ASK THE EXPERT Send questions to Ask the Expert / Act 2, Newsday Newsroom, 235 Pinelawn Rd., Melville, NY 11747-4226, or email email@example.com. Include your name, address and phone number. Questions can be answered only in this column. Advice is offered as general guidance. Check with your own advisers for your specific needs.