Beneficiary designations—for life insurance or retirement plans, for example—are an often overlooked aspect of estate planning. A change in life circumstances may suggest a need to change those beneficiaries. Beneficiary designations can be the source of estate litigation, as a recent case demonstrates.

Ronald and Heidi Lee had been married for ten years when Heidi sought a divorce. In the divorce proceedings, Heidi asked for and received $2,000 monthly maintenance and a lump sum of $35,384. To secure the payments, Ronald agreed to leave Heidi as the beneficiary of his $150,000 life insurance policy.

He didn’t do that. Ronald changed the beneficiary to his daughter, Abriel. When he died two years after the divorce was finalized, Ronald was current on his maintenance payments but still owed some $32,000 on the lump sum.

Both Heidi and Abriel claimed the insurance proceeds, and the inevitable lawsuit began. The insurance company deposited the proceeds with the court and was released from the case. Abriel offered to pay Heidi the $32,000 still owed to her, but Heidi believed that the terms of the divorce decree meant that she should get all of the $150,000 insurance proceeds because she should have been the sole beneficiary on the policy.

Examining the terms of the decree carefully, the trial court concluded that Abriel had the better argument. The insurance policy was meant to guarantee the payments to Heidi, not to provide a bonus in the event of Ronald’s premature death. The Washington appellate court now agreed with this judgment.

If you need to update this important aspect of your estate planning, now is a good time to review it. Give us a call by dialing 920-563-6616 ext. 3070, or email wealth@bankwithpremier.com to let us know how we can assist you with your estate planning needs.