Challenge A Life Insurance Beneficiary Change

Life insurance is designed to provide financial security to loved ones after a policyholder passes away. Typically, the policyholder selects one or more beneficiaries who will receive the life insurance payout upon their death. However, disputes can arise when a beneficiary change is made under suspicious circumstances, such as shortly before the policyholder’s death, or when allegations of undue influence or fraud emerge.

Challenging a beneficiary change in a life insurance policy can be legally complex and emotionally charged. This comprehensive guide will walk you through the legal grounds for contesting a beneficiary designation, the steps involved in filing a challenge, and specific considerations for challenging changes made in Florida. Our life insurance lawyers handle cases in most states either as primary counsel or through our network of local counsels or co-counsels.

Why Would a Beneficiary Change Be Challenged?

Beneficiary designations in life insurance policies are legally binding, but there are certain situations where a challenge may be justified. Common reasons for contesting a change include:

• Undue Influence: A beneficiary change made under pressure from another person may be invalid. For example, if a caregiver or family member pressured the policyholder to make the change, the court may find that the policyholder’s free will was compromised.
• Lack of Mental Capacity: If the policyholder was not of sound mind when they made the beneficiary change, such as due to dementia, Alzheimer’s, or another cognitive impairment, the change may be contested on the grounds that the policyholder lacked the mental capacity to make such a decision.
• Fraud or Forgery: A beneficiary change that was made without the policyholder’s knowledge or approval, such as through forgery or deception, may be voided. For example, someone might forge the policyholder’s signature on a beneficiary change form, or submit false documentation to the insurance company.
• Mistakes or Errors: Sometimes, clerical errors or miscommunications lead to unintentional beneficiary changes. In these cases, the court may consider evidence that the policyholder’s actual intent was different from what was recorded.

Legal Grounds for Challenging a Beneficiary Change

To successfully challenge a beneficiary change, there must typically be strong legal grounds to support the claim. Our life insurance lawyers can review the change. The most common legal arguments include:

1. Undue Influence

Undue influence occurs when someone exerts improper pressure on the policyholder to make a beneficiary change that benefits them. This typically involves a person in a position of trust, such as a family member, caregiver, or close friend, using manipulation to convince the policyholder to change the beneficiary.

For example, if a policyholder changed their beneficiary designation in favor of their adult child while being heavily reliant on that child for care, and evidence shows that the child manipulated or coerced the policyholder into making the change, a court might void the new designation.

2. Lack of Mental Capacity

If the policyholder lacked the mental ability to understand the consequences of changing their beneficiary at the time of the change, the designation can be challenged. Mental incapacity could result from age-related cognitive decline, a mental illness, or a medical condition affecting the policyholder’s judgment.

For example, if a policyholder suffering from advanced dementia changed their beneficiary designation in favor of a new individual, their other family members could argue that the policyholder did not have the mental capacity to make that decision.

3. Fraud or Forgery

Fraudulent changes to a life insurance policy, such as forging the policyholder’s signature on a beneficiary change form, can be challenged in court. A common example of fraud is when someone other than the policyholder submits a change request to the insurance company without the policyholder’s knowledge or consent.

4. Mistakes or Errors

If the policyholder’s intent was not properly reflected in the paperwork due to clerical errors or miscommunication, a challenge may be made to correct the mistake. For example, if the wrong form was submitted or the policyholder was misled into signing a change form, the designation may be contested.

Steps to Challenge a Beneficiary Change

If you believe that a beneficiary change was made improperly, you can take the following steps to challenge the change in court:

1. Gather Evidence

Collecting strong evidence is critical to successfully challenging a beneficiary change. Depending on the situation, relevant evidence may include:

• Medical records showing the policyholder’s mental capacity at the time of the change
• Witness testimony from those who observed interactions between the policyholder and the alleged influencer
• Documents or records that demonstrate the policyholder’s intent prior to the change
• Evidence of undue influence, fraud, or forgery

2. File a Legal Challenge

A formal legal challenge must be filed in the appropriate court. In most cases, this involves probate court, where disputes over life insurance proceeds and other assets are handled. An experienced life insurance attorney can help you navigate this process, file the necessary documents, and advocate on your behalf.

3. Present Your Case in Court

During the legal proceedings, you and your attorney will present evidence to support your claim that the beneficiary change was invalid. The court can evaluate the evidence and hear from all parties involved, including the beneficiaries, other family members, and expert witnesses if necessary.

4. Seek a Settlement or Court Ruling

In some cases, disputes over life insurance beneficiary changes may be resolved through negotiation or mediation, where both sides agree to a settlement. If a settlement cannot be reached, the court will issue a ruling determining whether the beneficiary change is valid or void.

Challenging a Beneficiary Change in Florida

Florida law provides specific protections for beneficiaries and policyholders. In Florida, life insurance disputes involving beneficiary changes are often handled in probate court, and the legal process follows similar steps as outlined above.

One unique aspect of Florida law is the treatment of beneficiary designations after divorce. Under Florida Statutes §732.703, a life insurance beneficiary designation in favor of a former spouse is automatically revoked upon divorce, unless the policyholder takes explicit action to reaffirm the designation post-divorce. This can lead to disputes between former spouses and new beneficiaries, making interpleader actions common in Florida. There are several nuances though which can impact this, like if the policy was a FEGLI policy, ERISA, contractually obligated, and other reasons.

Examples of Beneficiary Change Disputes

1. Undue Influence by a Caregiver
   An elderly policyholder who relied on a caregiver for daily assistance changed the beneficiary of their life insurance policy to name the caregiver shortly before passing away. The policyholder’s children challenge the change, arguing that the caregiver manipulated their parent into making the change for personal gain.
2. Last-Minute Beneficiary Change
   A policyholder made a last-minute change to their beneficiary designation on their deathbed, leaving the benefits to a friend instead of their spouse and children. The family challenges the change, claiming the policyholder was too ill to fully understand the consequences of their decision.
3. Forgery of Beneficiary Change Form
   An individual gains access to a policyholder’s life insurance documents and forges a signature on a beneficiary change form, redirecting the payout to themselves. The rightful beneficiaries challenge the change in court, citing fraud and forgery.

Contact a Florida Life Insurance Attorney

Challenging a beneficiary change can be a complex legal process that often requires an experienced life insurance attorney. At the Law Offices of Jason Turchin, we have helped clients across Florida contest improper beneficiary changes and fight for their rightful benefits. Contact us today at 800-337-7755 for a free consultation, or use our live chat feature. You won’t pay any fees or costs unless we win or settle your case.

Let us help you navigate the legal process and challenge an improper beneficiary change in Florida.