PostHeaderIcon Relief for the Forgetful..


Florida Statute 732.703, effective July 1, 2012, sets out to provide relief to divorced individuals that forgot to change the beneficiary designation on their retirement, life insurance and other contract based assets that would pass to their former spouse due to a beneficiary designation that was not changed at the time the parties were divorced.

Here’s the scenario, Jack and Jane are married for seven years during which Jane purchases a life insurance policy that will pay the beneficiary of the policy $750, 000.00 upon Jane’s death, and as any good spouse would, Jane names Jack as the beneficiary. During their seventh year together Jack and Jane’s marriage begins to deteriorate and by the end of the seventh year they divorce and distribute between themselves the assets of the marriage. Among them being the life insurance policy covering Jane’s life, which she got to keep no doubt because it was a term life policy and had no cash value. Some three months later Jane dies unexpectedly but neglects to change the beneficiary of her life insurance policy and Jack is in line to receive a very welcome and unexpected $750,000.00 windfall as a result of his former wife’s forgetfulness.

Was this what Jane had wanted? Let us make an educated guess and assume NOT. But that’s exactly what would happen if Jane died prior to July 1, 2012.  Florida Statute 732.703 seeks to correct such outcomes by establishing that any beneficiary designation naming a decedent’s  former spouse as the descendant’s beneficiary will be considered void as of the date of the parties’ divorce if the beneficiary designation was made prior to the parties’ divorce and:

1)  The descendent did not reaffirm, after the date of divorce, that the descendant’s former spouse should remain the beneficiary.

2)  The decedent’s will or trust executed or modified after the parties’ divorce does not reaffirm the beneficiary designation or otherwise provide that the former spouse is to remain the beneficiary.

3)  The parties’ order of divorce does not require the decedent’s former spouse to be or remain the beneficiary.

4)   The designation of the former spouse as beneficiary is not otherwise irrevocable under applicable law.

5)   The designation of the former spouse, as beneficiary, is not governed by another state’s laws to the contrary.

6)  The asset in question is not owned in both parties’ names under a contract that vests ownership in the former spouse upon the other parties’ death. Joint bank accounts and any real property held under a joint tenancy are good examples of such assets.

7)  The decedent did not remarry his or her former spouse and they remained married at the time of the decedent’s death.

8)  The asset in question is not a Florida State administered retirement plan; such as, Florida public school teachers retirement plan.

9)  Federal law does not provide otherwise. As an example, Federal law regulates 401K Retirement Plans and under current federal case law any beneficiary designation made is controlling even where the former spouse  has affirmatively waived his or her right to receive any benefit under the former spouses retirement plan.

So, back to our scenario with Jack and Jane and assume now that Jane died after July 1, 2012. Is all well and good? Well, maybe. Clearly, Jack will no longer be the beneficiary of Jane’s forgetfulness, but that does not necessarily mean that Jane’s other descendant’s will receive the proceeds of the life insurance policy. Why? Because unless Jane had designated a contingent or secondary beneficiary under the life insurance policy, the proceeds from that policy, in all likelihood, will now be distributed through the probate process and become subject to the claims of Jane’s creditors. Was this what Jane had wanted? Let us again make an educated guess and assume NOT.  The easiest way to avoid such outcomes is, of course, to change those beneficiary designations and to do so at the time a divorce action is initially filed.

Article dated: June 2012