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Contesting a Life Insurance Beneficiary in Ohio

Posted in Life Insurance, Probate. Tuesday, Oct 27th, 2015

After a person passes on, there are a variety of different things that need to get done to wind down their affairs. Many of these things happen through the probate process, a process by which a person’s estate is managed in conjunction with the court system. However, there are some things that need to be handled outside of probate. Life insurance policies are one such item, since they pass to the beneficiary without needing to go through the court system.

While this streamlined process can be convenient, it can also present potential problems since there is not court overseeing the payment of the life insurance policy. That can lead to issues if there is a dispute over who the policy’s rightful beneficiary is, such as if a person’s policy still lists an ex-spouse after a divorce. Fortunately, the law still provides a mechanism for contesting life insurance payouts in the event that there is a dispute.

How Life Insurance Works

Life insurance differs from most assets in that it does not have to move through the probate process in order to be paid out. This is because the life insurance payment is not property of the deceased that is being paid to a relative. Instead, it is a contract with the insurance company to provide a payout to a third party, the beneficiary, in the event that the insured dies, unless the policy makes the estate the beneficiary.

This difference is important because it means that life insurance companies are contractually bound to provide a payment to the beneficiary named in the policy. Consequently, disputing the payment will likely require a lawsuit against the insurance company in order to prove that the beneficiary named in the policy should not receive the life insurance payment for some reason.  See Bokemper vs Farmers New World Life Insurance et al, 10 CV 08 11569.

Reasons to Contest a Beneficiary

Although contesting a life insurance beneficiary is different from contesting a will, the main arguments are going to be very similar. Because the life insurance policy is a contract, people who want to change the contract are going to need to argue that there was some flaw in it when it was made or when the beneficiaries were changed, especially shortly before the death of the descendant. See Bokemper (cited and linked above), where Mike Gertner won a case for $200.000.00 where the brother tried to change the beneficiary from the descendant’s wife to him and others a few weeks prior to descendant’s death.

There are two common flaws that people will often argue; incompetence and undue influence.

The first argument, incompetence, goes to whether the person who named the beneficiary did so when they were of sound mind and body. People cannot make contracts if they lack sufficient mental acuity to understand what they are doing. Consequently, if a person designates a beneficiary while suffering from dementia or some other mental deficiency, it may be possible that they did not really intend to pay the person they named, which could be grounds for a change.

The second argument, undue influence, focuses on whether the person who made the beneficiary designation did so while another person was improperly influencing them to. Often this scenario arises in cases where a person names a non-relative caretaker as the beneficiary based on the caretaker’s overbearing influence.

Contesting an improper life insurance beneficiary can be an important step in ensuring that a loved one’s final wishes are carried out appropriately If you believe there may have been an error in a beneficiary designation and have questions about your legal rights, contact an Ohio probate litigation attorney at the Law Office of Mike Gertner today.