Can I use my will to change who I have designated to receive my retirement and insurance benefits?
A will should not be used to override beneficiary designations in various contracts, such as those relating to life insurance policies. This issue often arises when couples divorce, and the insured individual in his or her will replaces the ex-spouse as the designated beneficiary, but fails to register this change with the policy holder. Another common situation involves insured individuals who fail to properly change the original designated beneficiary after his or her death. “As a general rule, the method prescribed by the insurance contract must be followed in order to effect a change of beneficiary,” the New York Court of Appeals said in the 1998 court case, Kapcar v. Athena Life Insurance Company.
The same is usually true with changing pension benefit designations. New York law, for example, requires state workers to submit to the Office of the Comptroller a form detailing the desired beneficiary designation change. “The Comptroller has no authority or discretion to pay the retirement benefits to any person other than the member’s duly designated beneficiary … In the absence of such filing, any change in the designation is ineffective,” the Queens County Surrogate’s Court said in the 2007 court case, Estate of Kevin Williams.
However, if insured individuals took an “act or acts designed for the purpose of making the change, though they may fall short of accomplishing it,” courts may be more willing to order the policyholder to recognize the change, the court in the Kapcar case noted. Such act or acts may include submitting forms to the policyholder for a change of designated beneficiary, despite the failure to mail the policy for endorsement, as was the case in 1992’s Cable v. Prudential Insurance Company. Courts generally, however, will not view testamentary statements in a will as an act sufficient to change a beneficiary.
A will should always be updated every few years or after the person who created it, known as a testator, undergoes a major life event such as a marriage or divorce, the birth of a child or the death of a loved one. Sometimes, minor amendments can be made with what is known as a codicil. Other times, a new will may need to be written entirely.
In any case, consult with an attorney who can advise you on which beneficiary designation changes can or cannot be made in the will.
Greg T. Rinckey, Esq., is a founding partner at Tully Rinckey PLLC, a full-service law firm located in Colonie. For more information about the firm’s family and matrimonial law, estate planning, employment law, real estate, and bankruptcy practices, please visit www.1888Law4Life.com. If you would like your legal question or topic answered in the next issue, please contact Greg Rinckey at 518-218-7100 or [email protected] 1888law4life.com. The information in this column is not intended as legal advice.