In general, will provisions for a spouse are voided upon divorce. However, there is much more to an estate plan than the will—nonprobate property must be considered, and beneficiary designations have to be changed for assets such as retirement accounts and insurance policies. A recent court case illustrates potential complications.
In general, will provisions for a spouse are voided upon divorce. However, there is much more to an estate plan than the will—nonprobate property must be considered, and beneficiary designations have to be changed for assets such as retirement accounts and insurance policies. A recent court case illustrates potential complications.
On September 5, 2016, Teresa James informed her husband of 13 years, Dr. James Rocconi, that she was leaving him. She filed for divorce three days later. Accordingly, on September 9 Dr. Rocconi changed his will to disinherit Teresa in favor of his three adult children. On October 17, 2016, Dr. Rocco called Allianz Insurance Company to determine what, if any, insurance policies he had with them, and to remove Teresa if she was a beneficiary of any of them, because she had left him. The call was recorded, so we know that he told the representative “She could have told me that the Pope left the church and was getting married, and I wouldn’t have been more shocked.”
The representative sent a change-of-beneficiary form via fax, which Dr. Rocconi filled out by hand and returned via fax the same day, removing Teresa as beneficiary. Apparently, the insurance company did not record the change, but instead sent a letter to Dr. Rocconi stating that the form was incomplete without his signature. However, no evidence of such a letter was found among his papers.
After Dr. Rocconi’s death, the insurance company notified Teresa about the $300,000 death benefit. The children and the estate’s executor intervened, claiming that Dr. Rocconi had substantially complied with the requirements for changing the beneficiary. The lower court agreed; the Court of Appeals reversed; and the Supreme Court of Arkansas reversed again, reinstating the lower court’s decision. “Under Arkansas law, only substantial compliance with the insurance policy’s change-of-beneficiary procedures is required.” The completion of the faxed form, buttressed by the testimony of Rocconi’s lawyer and the recording of his conversations with the insurance company, are sufficient to meet that test.
The adult children were fortunate to have succeeded in this case, even considering the legal costs for all the necessary litigation. The better course might have been to obtain written confirmation from the insurance company that the beneficiary change had been recorded, which could have avoided the confusion and controversy after Dr. Rocconi’s death.
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