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Beneficiary Designations & Divorce

In American Family Life Assurance Company of Columbus v. Parker, the SJC ruled that a life insurance beneficiary designation naming an ex-spouse as beneficiary was revoked following the parties’ divorce by operation of law, pursuant to the Massachusetts Uniform Probate Code (§ 2-804), as the parties’ fully integrated separation agreement (that they negotiated without legal representation) contained no provision to the contrary and the parties represented in the separation agreement that  “[t]he parties have included in this Agreement their entire understanding.  No spoken or written statement outside this Agreement was relied on by either party in signing the Agreement.”  As such, the revocation upon divorce provisions of § 2-804 governed (retroactively).

In Parker, the underlying facts were as follows:  Prior to the parties’ divorce in 2016, Sean Parker (“Sean”) purchased a life insurance policy naming his then-wife, Dawn Diana-Parker (“Dawn”), as primary beneficiary and his mother, Joanna, as alternate beneficiary.  Following the parties divorce – according to Dawn – the parties entered into a verbal agreement whereby Dawn would continue to make payments on the policy until Sean’s death (as she had already been doing during the parties’ divorce due to a change in Sean’s financial circumstances). Upon Sean’s death, Dawn made a claim on the policy as primary beneficiary, after which she was informed by the insurer that her rights under the policy were extinguished by operation of law pursuant to the revocation provisions of § 2-804 – leaving Joanna as (alternate) beneficiary.

Given that the parties’ separation agreement made no mention of life insurance (specifically, a provision that would have expressly provided for Dawn’s beneficiary designation to survive the parties’ divorce), as well as the fact that Sean did not re-designate Dawn as beneficiary following the divorce, the Court (in recognizing the purpose, in part, of § 2-804 to provide finality), held that Sean had no contractual obligation to continue Dawn as beneficiary, and that Joanna was entitled to the death benefit. While certain standard, “boilerplate” clauses are often overlooked, they can be among the most important provisions in an entire contract – making it even more advisable to engage an attorney to assist in the preparation/drafting of a separation agreement.

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