Utah: Beneficiary Disputes and Interpleader Under Utah Law

No grandfathering

Utah adopted the Uniform Probate Code revocation rule in 1998. Under § 75-2-804(2), “[e]xcept as provided by the express terms of a governing instrument, a court order, or a contract relating to the division of the marital estate,” a divorce or annulment revokes any revocable disposition to the former spouse and to the former spouse’s relatives. Revoked provisions take effect “as if the former spouse and relatives of the former spouse disclaimed” them.¹

The Tenth Circuit’s decision in Stillman (2003), as described in Allen, held that the 1998 amendment applies “regardless of the dates of the beneficiary designation or the parties’ divorce.” In Stillman, a 1965 designation and a 1970 divorce were governed by the statute after the insured died in 1999. Allen summarized the result: “Thus, there is now a presumption that a divorce revokes the designation unless the property settlement or divorce decree states otherwise.”²

Engaged, friendly, never remarried: still revoked

In Allen, the insured named his then-fiancée as primary beneficiary on a 1995 policy and his brother as contingent beneficiary. They married, divorced in 2000 with a decree that did not mention the policy, and he died in 2008. The former wife raised four arguments, and the court rejected each:²

• They stayed friendly, and he never remarried. “However, the rule announced in Stillman did not depend on the insured’s remarriage.”
• The policy was meant to benefit their children. That understanding was not written into any policy, court order or marital contract, so the statutory exception did not apply.
• She was only engaged when named. A covered “governing instrument” is one executed before the divorce. “It does not limit the governing instruments to those executed only during the marriage.”
• She was also insured under the policy. The same rule applied.

The brother received the remaining deposit. Her later request for reconsideration, based on family affidavits, was denied.³

When the former spouse owns the policy

Goates came out the other way. The former wife had paid every premium on her former husband’s policy since it was issued in 2000, from “her own independent checking account,” including after the divorce. Judge Kimball concluded that she “was the rightful owner of the policy at the time of her divorce and at the time of Mr. Goates’ death,” so “[t]he statute does not apply to cut off Goates as a beneficiary.” The other primary beneficiary joined her motion, and the contingent beneficiary did not oppose it.⁴

The statute revokes dispositions made “by a divorced individual” in an instrument that individual executed. Who owned the policy, and who had the power to change the beneficiary, can therefore decide the case.

Notice to the insurer

Under § 75-2-804(7), a payor is not liable for paying the named beneficiary in good faith before it receives written notice of the divorce. Notice must be sent by registered or certified mail or served like a summons. After notice, the payor may deposit the money with the probate court. Separately, § 31A-22-413(2)(a) provides that, “[n]otwithstanding Section 75-2-804,” the insurer discharges its obligation if it pays the properly designated beneficiary, unless it has actual notice of an assignment or a change of beneficiary. A recipient who is not entitled to the money can still be required to return it under § 75-2-804(8).¹⁵

Decisions

Elsewhere on this site

• Evans v. Diamond (10th Cir. 2020), arising from Utah, held state-law claims against the named recipient of Thrift Savings Plan funds preempted under Hillman. Where a federal program decides the outcome, Utah’s statute does not. See federal programs and divorce and beneficiary designations.

Related guides

• State law differences
• Divorce and beneficiary designations
• Federal programs
• ERISA claims after payment

Footnotes

1. Utah Code § 75-2-804(1)–(2), (4), (7)–(8). Utah Legislature. ↩ ↩²

2. Farmers New World Life Ins. Co. v. Allen, No. 2:09-cv-6-TS, mem. decision at 1–7 (D. Utah Apr. 29, 2011), Doc. 34 (discussing and quoting Stillman v. Teachers Ins. & Annuity Ass’n, 343 F.3d 1311 (10th Cir. 2003)). GovInfo. ↩ ↩²

3. Farmers New World Life Ins. Co. v. Allen, No. 2:09-cv-6-TS (D. Utah June 29, 2011), Doc. 41. GovInfo. ↩

4. Primerica Life Ins. Co. v. Goates, No. 2:13-cv-43-DAK, mem. decision at 1–3 (D. Utah Dec. 5, 2013), Doc. 27. GovInfo. ↩

5. Utah Code § 31A-22-413(2)(a). Utah Legislature. ↩