INSURANCE AND LOANS
Question: After a temporary hearing on my suit for divorce, the court ordered that my husband of 21 years to pay me $1,000 per month temporary alimony and not to change the beneficiary of a $150,000 policy of insurance on his life so that, if he died, I would have security for my continued support. My husband was killed in an accident shortly after this hearing, and I found out that he had made his brother the beneficiary of this policy. My lawyer is considering going back to court, but he warned me that the court could rule that there is no remedy for me -- even though the change in beneficiary violated the order. If that is the case, I will be left with a home, a lot of debt, and no income. If my husband and I had not been separated, I would have remained the beneficiary. How could a court order mean so little and why should there be any question about my entitlement? Can I sue the insurance company for allowing the change?
Answer: Some courts say that changing a beneficiary in violation of a court order is void, while others tend to decide these questions based upon the facts of each situation. With no income and 21 years of marriage, it appears that, if necessary, your lawyer could make a compelling argument that since you would have probably been entitled to a permanent award of alimony, you are entitled to the proceeds. Another possible course of action could be to bring an action against your husband's brother and ask that a trust be impressed against the proceeds that were paid to him in violation of the order.
Like you, many beneficiaries who do not own the policies rely upon court orders for protection and find out only after a death that the beneficiary had been changed in violation of the order. If you had been the owner of the policy, you would have had control of the policy, and therefore direct access to information from the insurance company. If the insurance company did not have notice of the court order, it is unlikely that you would have a cause of action against it.
How can what happened to you be avoided? If you are not the owner of the policy, consider making the insurance company a party to the litigation in order to put the company on notice of the court order. As a party, the company can be required by the court to not accept a beneficiary change without a court order and to notify the court and the lawyers should such an attempt be made. And at a minimum, put the insurance company on notice of the existence of the order.
Question: You wrote some time ago that it was illegal for a bank to require a wife to sign a business note for her husband when the bank was not looking at her income or property for payback. I have a similar problem, but my divorce lawyer says he is not aware of this law and can't find anything about it in our state. The amount involved here is more than $65,000. Could you send me information about this law so I can show it to my lawyer?
Answer: It is astounding that your lawyer has not researched one of the most often violated consumer credit laws -the Equal Credit Opportunity Act. Anytime a husband and wife sign a note, the possibility of an ECOA claim exists. ECOA was enacted in 1974 to combat discrimination against married women who were often turned down for credit without their husband's guaranty. A lending institution which violates this law can be sued for actual and punitive damages and attorneys fees.
Tell your lawyer that the reason he could not find anything about ECOA in your state laws is because ECOA is a federal law. With so many federal laws now applying to matrimonial matters, we suggest that your lawyer take a refresher course in legal research if he intends to continue practicing in this expanding area of the law.
Jan Collins Stucker is an award-winning writer and editor. Jan Warner is a matrimonial, tax, and elder law attorney. Both are based in Columbia, South Carolina.
Please send your questions by email to janwarner@flyingsolo.com or by mail to P.O.Box 11704, Columbia, S.C. 29211.
