Revocation of Ex-wife’s Interest in Life Insurance Policy?

In a recent decision from the Chancery Division in Essex County, New Jersey, In the Matter of the Estate of Mittal Barua, Docket No. ESX-CP-0017-2011, the issue to be decided was whether an ex-wife’s interests in her decedent’s life insurance policy were revoked by the Judgment of Divorce pursuant to N.J.S.A. § 3B:3-14.

By way of background, plaintiff was married to decedent. At the time, plaintiff’s son – from a previous relationship – was six years old. In January 2006, the decedent traveled to Bangladesh with the intention of staying for one month. However, he did not return and two years later, plaintiff filed for divorce. In February 2008, a Judgment of Divorce was entered. At the time of his disappearance, the decedent owned a term life insurance policy in the amount of $200,000.00. Plaintiff was named as primary beneficiary and plaintiff’s son was named as contingent beneficiary.

Three years following the divorce, plaintiff filed an action for Declaration of Death based on the decedent’s disappearance and her inability to locate him for five years. In March 2011, a Judgment of Death was entered. Thereafter, plaintiff filed an action seeking to turnover the life insurance proceeds. Plaintiff’s requested relief was opposed by the UPA. The issue to be decided was whether an ex-wife’s interests in her decedent’s life insurance policy were revoked by the Judgment of Divorce pursuant to N.J.S.A. § 3B:3-14.

N.J.S.A. 3B:3-14 provides that “except as provided by the express terms of a governing instrument, a court order, or a contract relating to the division of the marital estate made between the divorced individuals before or after the marriage, divorce or annulment, a divorce or annulment revokes any revocable dispositions or appointment of property made by a divorced individual to his former spouse in a governing instrument and any disposition or appointment created by law or in a governing instrument to a relative of the divorced individual’s former spouse.” N.J.S.A. § 3B:3-14(a)(1)(a). A “governing instrument” is one that is “executed by the divorced individual before the divorce or annulment,” N.J.S.A. § 3B:3-14(b), and the definition of “governing instrument” in N.J.S.A. § 3B:1-1 includes an insurance or annuity policy. A “relative of the divorced individual’s former spouse” is defined in N.J.S.A. § 3B:3-14 (b)(4) as “an individual who is related to the divorced individual’s former spouse by blood, adoption or affinity and who, after the divorce or annulment, is not related to the divorced individual by blood, adoption or affinity.”

The UPA argues that the Judgment of Divorce revoked plaintiff’s designation as primary beneficiary on decedent’s insurance policy as she is a “former spouse” within the meaning of the statute. Additionally, counsel argues that the divorce revoked her son’s designation as contingent beneficiary as decedent never adopted him, they were not related by blood, and her son’s affinity relationship with decedent was terminated by the divorce. Plaintiff contends a life insurance policy is a chose in action. Since she was granted in the Judgment of Divorce any choices in action, the court order exception in N.J.S.A. 3B:3-14 is triggered and her status as the primary beneficiary survives revocation by divorce.

In the end, the court found that Plaintiff should receive the insurance policy proceeds pursuant to the Judgment of Divorce and her designation as primary beneficiary was not revoked under N.J.S.A. 3B:3-14. The purpose of this statute is to prevent unjust results when a divorced individual dies without having removed his former spouse as the beneficiary on his insurance policy, and this would not be served by application to the unique circumstances of this case.

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