Life Insurance: Can a Wrongfully Excluded Beneficiary Still Receive the Proceeds?

Short answer…Yes. A recent Minnesota Appellate Court case was released, although unpublished, stating that although a person may have passed away, they still have an obligation to fulfill their requirements under a dissolution Judgment and Decree.

Often when child support or spousal maintenance is awarded as part of a dissolution, the obligation is secured by life insurance. Good, bad, right or wrong, often parties will not put down the proper beneficiaries at ordered; instead listing a new spouse or significant other, etc. Therefore, when the obligor passes away, the issue becomes who is entitled to the life insurance benefit?

The Minnesota Appellate Court clearly ruled in Hall v. Reynolds, that the obligor cannot skirt around their obligations by naming a different beneficiary then listed in their Judgment and Decree. The Court ruled, “…a judgment and decree ultimately controls the beneficiary designation regardless of whether a new third-party beneficiary is designated.” Id. Further, the Court had jurisdiction to enforce the life insurance provision because “…father’s act of disregarding his own dissolution decree is a sufficient bases for the district court to impose an equitable remedy on the wrongly assigned benefits even though the recipient of those benefits did nothing wrong. To do otherwise would reward obligors who knowingly violate provisions of their dissolution decrees.” Id.

This case very clearly states and stands for if a party is ordered to do something in their Judgment and Decree, it controls – even after death.

If you have questions related to a possible dissolution of marriage, child custody questions, or parenting time concerns, please do not hesitate to contact our office (952) 224-9410