State law
Washington: Beneficiary Disputes and Interpleader Under Washington Law
Washington's revocation statute covers every nonprobate asset and gives payors an express right to hold funds when a dispute arises. It is also the statute the Supreme Court held preempted for ERISA plans in Egelhoff, and a decree securing child support can void a later change outright.
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The statute covers all nonprobate assets
RCW 11.07.010 applies “to all nonprobate assets, wherever situated.” When a marriage or state registered domestic partnership is dissolved, invalidated or terminated, a prior provision for payment at death to the former spouse or partner “is revoked.” The asset passes “as if the former spouse or former state registered domestic partner, failed to survive the decedent.”1
Under subsection (2)(b), revocation does not apply “if and to the extent that”:1
- the instrument “expressly provides otherwise”;
- a decree or court order requires the decedent to maintain the asset for the former spouse, the partner or the children, and no other asset fulfills that requirement;
- a court order requires the decedent to maintain the asset for someone else, and no other asset fulfills that requirement; or
- the decedent could not have revoked the designation by unilateral action immediately after the decree.
Payors may hold the money
Subsection (3) addresses the insurer directly. A payor is not liable for paying the former spouse before it has “actual knowledge” of the divorce, but it is liable for payments made after it has that knowledge. If the payor knows of a dispute or “is otherwise uncertain as to who is entitled,” it may refuse payment until “[a]ll beneficiaries and other interested persons claiming an interest have consented in writing” or a court directs payment. It may also require a bond.1 Interpleader is the usual way to obtain that court direction; see named in an interpleader.
Where the statute stops
- ERISA. In Egelhoff v. Egelhoff (2001), the Supreme Court held this statute preempted for ERISA plans. The plan documents control, and the outcome turns on federal law; see federal programs. A later default judgment on this site, Sun Life v. Estate of Wheeler, held that ERISA also preempts Washington community property law as against a plan’s named beneficiary.
- Partners who never married. In Minnesota Life v. Roberson, the statute did not reach a former partner who was never a spouse or registered domestic partner.
Child-support security: void, not voidable
A beneficiary normally has only an expectancy while the insured is alive. Washington makes an exception when a dissolution decree encumbers the policy as security for child support. In Burton, the court explained that “any attempt to change beneficiaries while the children are still on child support is void at the time of execution.”2
Winning that point does not end the case. Burton shows how timing can leave no one entitled at law:
- The change. The insured named his new wife while the youngest child still received support, so the change was void.
- The obligation. By the time he died, his support obligation had ended, and so had his duty to name the children.
- Equity. “Because legal principles do not provide an answer, the Court turns to equitable principles.”2
Decisions
State Farm Life Ins. Co. v. Griffen (E.D. Wash. 2009)
- Facts
- A $100,000 policy named the insured's wife as primary beneficiary and his estate as successor. They divorced in 1999, and the decree awarded him his life insurance. He never changed the designation. The former wife did not oppose the estate's summary judgment motion.
- Holding
- Under RCW 11.07.010(2)(a), the former wife's designation was "automatically revoked when they divorced." Because the insured never re-designated her after the decree, the proceeds went to the estate as the secondary beneficiary.
- Why it matters
- This is the statute's default operation. Only a new designation after the decree, or one of the listed exceptions, keeps a former spouse in place.
Opinion: GovInfo.
Farmers New World Life Ins. v. Burton (E.D. Wash. 2019)
- Facts
- An Oregon divorce judgment required the insured to keep his existing life insurance naming the children of that marriage while he owed child support. In 2015 he named his third wife instead. The youngest child's support ended before his death in 2017, and that child also received the proceeds of a separate accidental death policy.
- Holding
- The 2015 change was void, but the children's claim had lapsed with the support obligation, so neither side was entitled at law. Weighing equity, the court found no evidence of unclean hands by the new wife and refused to impute the insured's conduct to her, because "the ‘wrong’ of inequitable conduct is that of the actor." It awarded her the $100,000 plus interest. On reconsideration, the court refused to consider the RCW 11.07.010 argument, raised for the first time, and noted that the case "was more complicated than the reading of one subsection of a Washington statute."
- Why it matters
- A support-security clause protects children only while support is owed. Arguments not raised by summary judgment may be lost.
Opinions: GovInfo (summary judgment); GovInfo (reconsideration).
Elsewhere on this site
- Minnesota Life v. Roberson (W.D. Wash. 2019) and Sun Life v. Estate of Wheeler (W.D. Wash. 2020) also appear in the timelines in how long an interpleader takes.
- Egelhoff v. Egelhoff is discussed in divorce and beneficiary designations.