State law
Vermont: Beneficiary Changes by an Agent Under a Power of Attorney
Vermont's leading federal decision on beneficiary disputes asks when an agent under a power of attorney may name himself as beneficiary of the principal's life insurance.
An agent who named himself
In Ashworth, the insured’s agent under a power of attorney, who had married her, used the power to request a change naming himself as beneficiary of 77% of her annuity life insurance policy. She died three days later. The insurer accepted him as her attorney-in-fact but denied the change, citing Vermont’s power of attorney statute, 14 V.S.A. § 3504, and later interpleaded.
Chief Judge Reiss began from the rule that “Under Vermont law, a beneficiary of a life insurance policy generally has no existing property rights because his or her interest in the policy ‘during the lifetime of the insured [is] a mere expectancy.’”1 On that basis the court held that the agent “did not receive a ‘gift’ when he attempted to change the Policy’s beneficiary.”2 The change was still self-dealing: “Mr. Ashworth’s designation of himself as a beneficiary under the Policy thus clearly falls within the statute.”3 Because the facts about the change were disputed, his motion for summary judgment was denied without prejudice. The court also denied the competing claimant estate’s cross-motion, which argued among other things that the power of attorney was invalid because the agent had accepted it prematurely.
The ruling did not decide who takes the proceeds. For the wider issues, see undue influence and capacity and change-of-beneficiary disputes.
New York Life Ins. & Annuity Corp. v. Ashworth (D. Vt. 2014)
- Holding
- Not a gift, but a self-dealing transaction under the statute; cross-motions denied (slip op. at 11–13).
Opinion: GovInfo. Statute: 14 V.S.A. § 3504.