Have You Named Your Beneficiaries? Do You Need to Update Your Beneficiaries?

Too often, clients fail to ensure someone is named on beneficiary designations for their assets.  This type of simple planning can prevent potential long, drawn out, expensive litigation.  Recently, the United States District Court of Appeals for the Seventh Circuit upheld a District Court’s decision to award the proceeds of a life insurance policy to a decedent’s son.  The decedent’s son was not designated as the beneficiary to the policy.

Minnesota Life Insurance Company v. Quincy Jones is a case about a life insurance policy holder who failed to designate a beneficiary to his policy.  Lenord Jones, the policy holder, was murdered.  Lenord left no will.  The policy provided that the $307,000 proceeds would go first to a surviving spouse, second to surviving children, third to surviving parents and fourth to his estate.  Lenord had no spouse.

Quincy Jones and Annie Moore, both residents of Illinois, claimed to be Lenord’s children.  Each of them asserted claims to the proceeds.  Lenord’s biological sister also claimed the proceeds, asserting that she was Lenord’s only known blood relative.  Lenord’s sister insisted that Lenord was gay and did not have any children.

Annie agreed to take a DNA test, but the test established that Annie was not Lenord’s daughter.  Rule 35 of the Federal Rules of Civil Procedure would have allowed, but did not require, the District Court to order a DNA test for Quincy.1  Illinois law includes a presumption of paternity.2

Lenord’s income tax returns showed that he claimed multiple children as dependents.  Sometimes he listed Quincy and other times he did not.  However, the District Court declined to order a test for Quincy because Lenord had held Quincy out as his biological son and signed an order in 1996 acknowledging him as his son.

The Court awarded the payment of the proceeds to Quincy, after the payment of funeral expenses.

Even if you have designated beneficiaries to your policies, it is important to make sure they are current.  If you have had a major life change, such as a divorce, death, or birth in the family, you may need to re-examine or update your designations.  Too often clients get divorced and forget to change the beneficiary designation of their ex-spouse.  It is difficult to dispute a specific designation after the fact. The discretion to award the proceeds may be left to the court, or to the insurance company.

1Fed. R. Civ. P. 22

2(750 ILCS 45/) Illinois Parentage Act of 1984

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