Beneficiary disputes
Beneficiary Disputes: Why They Happen and How Courts Decide Them
Most interpleader cases over life insurance, retirement benefits, and accounts come down to one question, which is whether the beneficiary on file should be paid. This overview explains the common reasons that question gets disputed and links to a detailed guide for each.
The common causes
| Cause | The usual question | Guide |
|---|---|---|
| Divorce | Does a former spouse who is still named get paid? | Divorce |
| ERISA plan pays a former spouse | Can the estate recover the money from the person the plan paid? | ERISA post-distribution claims |
| Incomplete or late change | Did an attempted change of beneficiary take effect? | Change of beneficiary |
| Undue influence or capacity | Was the change the insured’s own free and informed choice? | Undue influence and capacity |
| A suspicious death | Is a beneficiary barred for causing the death? | The slayer rule |
| Deaths close together | Who survived whom, and does the policy require survival for a period? | Simultaneous death |
| A child has a claim | Who represents the child, and will the court approve a settlement? | Minor beneficiaries |
| Federal coverage | Does federal law override a state rule or court order? | Federal programs |
Questions that cut across every dispute
What governs the asset? An individual policy or IRA is usually governed by state law and the contract. An employer plan is usually governed by ERISA, which requires plan administrators to follow the plan documents.1 FEGLI and SGLI are governed by federal statutes. The guide to what can be interpleaded covers each kind of asset. The same facts can come out differently depending on the answer. See divorce for the clearest example.
Who has the burden? The person challenging the named beneficiary usually must prove the grounds. Some rules shift that burden, such as presumptions of undue influence in some states, or the plan documents rule for ERISA plans, which favors the beneficiary on file.
What is the evidence? Forms, policy terms, medical records, and witness testimony decide most cases. Belief or suspicion alone does not.
Is there a case yet? Many disputes begin with a letter to the insurer and become an interpleader only if the parties cannot agree. See how a claim freezes payment and, if a case has been filed, named in an interpleader.
How courts have ruled
Each guide above includes short summaries of published decisions, including challenges that succeeded and ones that failed. The key decisions page summarizes the Supreme Court cases in more detail.
Footnotes
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Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 555 U.S. 285 (2009). ↩