Life Insurance is a Non-Estate Asset

Life insurance is more commonly than not becoming a Non-Estate Asset.  This means that a loved one’s life insurance policy has been structured in such a way to keep it separate from a person’s Estate and as a consequence will not be vulnerable to a Family Provision claim should one eventuate after their death.

However, just because you cannot dispute the provision of life insurance through Testators Family Maintenance, this does not mean it is the end of the road…and most definitely not, when working with Hentys Lawyers.

Will Disputes & The Provision of a Life Insurance Policy?

The situation is such: Before their death, the deceased determined an individual as beneficiary of their life insurance policy. As a result, this nomination is binding, the policy does not form part of the Estate and the pay-out goes directly to the nominated individual regardless of who they are. However, you believe that it is unjust for the nominated beneficiary to receive such provision and ask – is there anything I can do?

The answer: Yes – but we will be honest with you. Challenging a life insurance beneficiary designation is not easy. This is because unlike a Will, life insurance does not go through probate so there is no automatic court scrutiny of the document. Instead, an insurance policy is a contract between the insured person and the issuing company, it is designed to be irrefutable. For a third party to gain enough proof to show that the nominated beneficiary is the wrong one is rare. However, rare does not mean impossible!

When May a Dispute on Life Insurance Be Successful?

The two most common examples of a possible dispute are (1) major life changes, or (2) a sudden change of beneficiary before death.

1. Major life changes include: Marriage, divorce, re-marriage, the birth of a child or an adoption. I.e. you have been married to your husband for 10 years, however this is his second marriage and he has forgotten to remove his first wife as beneficiary of his death. It is possible that you could be successful in claiming that his first wife should not be the beneficiary of his policy. Although, you will have to prove that he did not intend for her to be the beneficiary despite your marriage, and it was purely an oversite.
2. A sudden change: e a seriously ill policymaker has made a change in his/her beneficiaries towards the end of their life. This change does not favour you, where his/her earlier policy did and you may argue that the policyholder was not of a sound mind when making the latest changes. You would be arguing undue influence in that the newly named beneficiary took situational or constitutional advantage of the policyholder and convinced him/her to change the policy.

In light of the above, if you think you may have a valid argument, or just want to explore some options further, do not hesitate to contact the team at Hentys Lawyers, as we can help you Contest and Defend Wills.