Timing is Everything: Beneficiary Change Made During Divorce Action in Violation of NY’s Automatic Orders Ineffective
July 8, 2015
| Agents of America
Reliastar Life Ins. Co. of New York v. Cristando, N.Y. App. Div., 2d Dept., June 3, 2015
Under New York law, while the designation of an ex-spouse beneficiary will be subject to automatic revocation in most circumstances, that same change cannot be made during the pendency of the divorce proceeding. The New York Appellate Division affirmed a trial court’s decision, finding such that a wife’s decision to change the beneficiary of her life insurance policy while her divorce was pending violated the “automatic orders” of New York’s Domestic Relations Law rendering the change ineffective.
New York’s Domestic Relations Law § 236(B)(2)(b) provides in relevant part that “Neither party shall change the beneficiaries of any existing life insurance policies, and each party shall maintain the existing life insurance, automobile insurance, homeowners and renters insurance policies in full force and effect” during the pendency of a divorce proceeding.
Here, the insured filed for divorce in 2009 and the divorce summons included the “automatic orders” enjoining the insured from changing the beneficiary of her term life insurance policy during the pendency of the divorce action. However, in May 2012, before the beginning of the divorce trial, the insured changed the primary beneficiary from her soon to be ex-spouse to her brother. The insured died prior to the entry of the divorce decree.
The insurer filed an interpleader action as both the ex-spouse and brother submitted claims for the policy proceeds. The trial court directed the insurer to pay the proceeds of the life insurance policy to the ex-spouse. The appellate court affirmed finding that the insured had, by changing the primary beneficiary of her life insurance policy while the divorce action was still pending, violated the automatic orders that took effect upon the filing of the divorce action.