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A Better Partnership
October 07, 2009

COA Opinion: Life Insurance Company Cannot Pay Ex-Wife of Decedent Once it Has Notice of a Divorce

On October 6, 2009, the Court of Appeals published the majority opinion of Judges Talbot and Hoekstra in In re Estate of Gaylord Genaw, Sr., No. 284214. The majority affirmed summary disposition in favor of a decedent's estate that sought to recover life insurance proceeds from an insurer which had already paid policy benefits to the decedent's ex-wife, who was still listed on the policy as the beneficiary, but whose rights to the policy proceeds were extinguished through her divorce decree. Judge Fitzgerald dissented.

The majority relied upon a Michigan statute that provided that a judgment of divorce determines rights to life insurance proceeds. MCL ' 552.101(2). That statute also provides that the insurer "shall be discharged of all liability on the policy by payment of its proceeds in accordance with the terms of the policy unless before the payment the company receives written notice, by or on behalf of the insured or the estate of the insured, 1 of the heirs of the insured, or any other person having an interest in the policy, of a claim under the policy and the divorce."

The majority concluded that, in this case, the safe harbor provision did not apply, because the insurer had received the requisite notice from an appropriate party. Specifically, the ex-wife had filed a claim for benefits which indicated that she was divorced from the decedent. The majority indicated that the statute only requires notice of the divorce, not notice of the particular terms of the divorce. Additionally, the majority said that the ex-wife, as the listed beneficiary under the policy, was qualified to provide such notice where the statute provided that the notice could come from "any other person having an interest in the policy." The dissent disagreed with this last conclusion. Judge Fitzgerald concluded that "'other person' logically means a person other than the claimant (beneficiary) already known to the insurer." Thus, the dissent would hold that the insurer did not receive notice from one of the persons identified in the statute prior to making its payment, and thus is discharged from liability.

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