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The Moneyist: My father’s ex-wife stole his life insurance, breaking the terms of their divorce decree

Dear Moneyist,

In 1998, my father divorced his wife. They lived in California, but divorced in Texas. In the divorce papers, it said that my father’s lifestyles insurance coverage plan was my father’s belongings. He left no will. Dad at all times said we'd be taken care of after his loss of life. He leaves myself and my brother who is older, but he has mental well being problems and he has a incapacity.

I found out my father’s ex-wife cashed in his lifestyles insurance coverage plan. My father by no means took her off as beneficiary, but he stored it in their divorce. Do I've a leg to face on? He left her on a joint account with $100,000 because I consider that’s how he paid her from his retirement. We settled out of court, and my brother and I gained $52,000.

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My dad’s ex-wife asked me about lifestyles insurance plans. I didn’t put two and two together and I believed she was looking to assist. Well, I learned she was as mean as dad at all times said and instructed everyone around right here in Texas. I also let the insurance coverage company know, nevertheless it was too late. The company already gave her the cash.

I've now not been in a position to reach her since then. What can I do? I dropped everything and bought everything to transport from Virginia to Texas to maintain my father who was a veteran on complete incapacity. My father’s lifestyles insurance coverage and bank accounts had been wiped clean out by means of his ex-wife. So I’m left with not anything to struggle for my brother and me.

Any advice could be greatly appreciated. My greatest worry is that it’s too late and I will be able to’t have the funds for to head after her.

Brent

Dear Brent,

Divorce does now not automatically mean that the spouse is now not entitled to the policy, if he or she is a named beneficiary. When your father passed away, your former stepmother would had been entitled to that cash. However, if she signed papers that said she should surrender that policy once they split their property, she may now be in hot water. How hot will depend on what you do next.

Of direction, the beneficiary on a lifestyles insurance policy is frequently changed if one partner concurs to be taken off the policy when the property are split. The lifestyles insurance coverage company doesn’t keep observe of such issues. It generally pays out to whomever is listed on the policy. The accountability of who should be named beneficiary lies with the owner of the policy. And that’s where it gets complicated.

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Bruce Jackson from Ohio died in 2013. His divorce decree named his daughter as beneficiary of his lifestyles insurance coverage, but he disregarded to switch the name of the beneficiary from his uncle to his daughter on the policy, so Sun Life paid his uncle instead. A federal pass judgement on upheld the divorce decree. Sun Life appealed, however the Sixth Circuit Court of Appeals in 2017 also sided together with his daughter.

The divorce decree, which is sanctioned by means of the courts, trumped the lifestyles insurance policy, a non-public contract. That case was specifically messy as it gave the impression that no person was looking to claim something that he or she believed did not belong to them. It also took a number of years to work its means in the course of the courts, so it’s now not clear whether the insurer or the uncle repaid the cash.

That case, Life Assurance Co. of Canada vs. Jackson, has a number of key takeaways for everybody else, in line with Fleming & Curti, a regulation firm in Tucson, Ariz. Among them: “Pay attention to beneficiary designations, and observe up you probably have lifestyles adjustments.” And, “Way an excessive amount of of Bruce Jackson’s insurance coverage proceeds went to legal professionals. Don’t let that occur for your property plan.”

Don’t pass over: My fiancé needs to maintain me financially, but I must leave my kids

That was now not the primary showdown over a lifestyles insurance policy post-divorce — and it received’t be the closing. That case is relevant right here because it states that the divorce decree trumps a non-public contract within the eyes of the regulation. If your former stepmother agreed to forego the proceeds from this policy, she has a accountability to uphold that — even supposing your father failed to take her name off it.

You have a number of not-insurmountable demanding situations forward. You should find a attorney who will do that on contingency, if you don't have any money to pay for a attorney. You can get started with Texas Legal Services Center or a legal aid center for your fatherland. If or when you win this situation, you should locate your father’s former spouse and hope that she hasn’t already spent or hidden the cash.

It is a cautionary tale to at all times whole essential forms.

Do you have got questions about inheritance, tipping, weddings, circle of relatives feuds, friends or any difficult problems in the case of manners and money? Send them to MarketWatch’s Moneyist and please come with the state where you are living (no complete names will probably be used).

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Hello there, MarketWatchers. Check out the Moneyist personal Facebook staff, where we search for answers to lifestyles’s thorniest money problems. Readers write in to me with all types of dilemmas: inheritance, wills, divorce, tipping, gifting. I frequently communicate to legal professionals, accountants, monetary advisers and different experts, in addition to providing my very own ideas. I receive extra letters than I may ever solution, so I’ll be bringing all of that guidance — together with some you may now not see in those columns — to this staff. Post your questions, inform me what you want to understand extra about, or weigh in on the newest Moneyist columns.

Quentin Fottrell is MarketWatch's personal-finance editor and The Moneyist columnist for MarketWatch. You can observe him on Twitter @quantanamo.

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