R.I. Supreme Court Rules on Post-Divorce Life Insurance Case
Posted By McIntyre Tate LLP
The Rhode Island Supreme Court recently decided an interesting post divorce property division case. The parties had reached an agreement whereby they would "cash in forthwith" life insurance policies, annuities, and investment policies and equally divide them. However, prior to the service of the divorce summons on this husband, he had already changed the beneficiary designations on his life insurance policy to replace his wife and name his uncle. Shortly after the parties divorce hearing (but before the Family Court final judgment entered) the husband died. As a beneficiary of the life insurance policy, husband's uncle claimed the $375,000 policy. When the insurance company balked at paying, he sued the insurance company and the wife. The Supreme Court ruled that because the husband did nothing wrong at the time he changed the beneficiary designation on the life insurance policy (three days before he was served with the Family Court divorce complaint) the divorce action "abates" due to the death of one of the spouses. Therefore, so too did the order requiring the division of their property. The court further found that husband was "within his rights when he changed the beneficiary of his life insurance policy" because he had not yet been served with the divorce complaint. Accordingly, the wife's interest in the divorce decree was defeated.