Under the common law of some states, if an individual names his or her spouse as the beneficiary on a life insurance policy, gets divorced, and then dies without changing the beneficiary designation, the mere fact of a divorce will not operate to defeat the beneficiary’s claim. Some states, however, have enacted statutory provisions to address this situation.
For example, Florida recently amended its statutes to provide that beneficiary designations shall pass, following a divorce, as if the decedent’s former spouse predeceased the decedent. Section 732.703 of the Florida Statutes applies not just to life insurance policies, but to annuities, employee benefit plans, individual retirement accounts, and others.
The payor of life insurance proceeds may rely on such statutes to review the deceased insured’s marital status on the death certificate and the relationship of the claimant to the deceased, make payment decisions, and avoid the delay and expense of filing an interpleader action. Under the Florida statute, if the death certificate is silent as to marital status at death, the payor is not liable for paying or transferring an interest in the claimed asset to the primary beneficiary if it first obtains, from that beneficiary, a validly executed affidavit in substantially the form set forth in the statute.
There are notable exceptions to the application of these statutes; for example, when a final judgment requires the decedent to maintain the asset for the benefit of the former spouse or children. Insurers or others seeking to rely on the Florida or similar statutes are cautioned to carefully review their provisions prior to relying on them to pay death benefits.