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Got Life Insurance? Designate a Beneficiary! Here’s Why

Attorneys F. Kirk Kolodner and James D. Handley of Gordon Feinblatt, LLC convinced a U.S. District Court judge to award $100,000 in life insurance proceeds to the adult grandchildren of a man whose live-in girlfriend failed to prove she was his common-law wife.

On their way home to Washington, D.C. from a family funeral in North Carolina, Ted, his only child Connie and his 21-year-old grandson Ike were killed in a car accident when the vehicle Ike was driving went off the road and struck a tree.

Two decades earlier, Ted had obtained a life insurance policy, which provided $100,000 in accidental death benefits, but Ted did not name a beneficiary. The policy provided that in the absence of a named beneficiary, death benefits shall be paid “to your spouse, if living; otherwise equally to your then living lawful children, if any, [including stepchildren and adopted children]; otherwise equally to your then living parents or parent; otherwise to your estate.”

After Ted died, the life insurance company sought to determine the proper beneficiaries, but there were competing claimants. Lauren claimed to be Ted’s common-law wife. Rochelle claimed to be Ted’s stepchild. Carol, the daughter of Connie who died in the car accident, claimed to be Ted’s grandchild and heir under his estate.

Unsure who to pay, the life insurance company filed an interpleader complaint, deposited the $100,000 policy proceeds with the U.S. District Court in Baltimore, and named all claimants as “defendants” for them to establish their entitlement to the policy proceeds.

The case languished for years largely because the claimants did not have lawyers and did not know how to proceed. The judge offered all parties pro bono counsel. Only Carol accepted the judge’s offer. Gordon Feinblatt attorney F. Kirk Kolodner was appointed to represent Carol on a pro bono basis.

After investigating the various claims, Carol’s lawyers determined that Carol and her brother James, who had not been named a party, were Ted’s only living grandchildren and heirs of his estate, and they had the superior claim. Ted, who had been married to Robin before her death in 1995, had only one child, Connie. Connie, who died in the car accident, had two children, Carol and James.

After Robin’s death, Ted began living with Lauren in Washington, D.C., but they never married. Washington, D.C., law recognizes common-law marriages, but co-habitation alone does not prove a common-law marriage. Rather, to establish a common-law marriage, a “present tense expression” of mutual agreement that the parties are married must also exist. Lauren, who claimed to be Ted’s spouse, failed to prove this. Also, Ted’s death certificate stated that he died a widow.

Complicating matters, Lauren died in December 2017 while the case was still pending. As a result, her entitlement to the policy proceeds ended but her heirs pursued her claim.

As stated, Ted and Robin had been married. Prior to their marriage, Robin had had a child, Rochelle, by another man. Hence, Rochelle was Ted’s stepchild. As a result of Robin’s death in 1995, Rochelle’s familial ties to Ted ended as a matter of law. Also, Ted never adopted Rochelle. Because Rochelle was no longer deemed to be Ted’s stepchild, she was not entitled to the policy proceeds.

To expedite resolution without the need for a trial, Carol’s attorneys moved for summary judgment, asserting that Carol and her brother, James, were the only persons entitled to the policy proceeds because they were Ted’s only living grandchildren and the sole heirs to his estate. Carol asserted that Ted died without a legal spouse, and his parents were deceased. Carol asserted that Lauren and Rochelle were not entitled to the policy proceeds for the reasons stated above.

Six years after Ted died, the judge awarded the policy proceeds to Carol and James, equally, as Ted’s grandchildren and his sole heirs.

The judge found that Lauren and her heirs had failed to prove the existence of a common-law marriage between Ted and Lauren even though they had lived together for many years. Living together is not enough to establish a common-law marriage. The judge agreed with Carol’s lawyers that there was no evidence of a “present tense expression” of mutual agreement of a marriage between Ted and Lauren. For example, they did not have a joint bank account; Lauren was not on the lease to the residence she and Ted occupied; and they did not file joint income tax returns.

The judge also found that Rochelle was not Ted’s stepchild at the time of Ted’s death, because her status as his stepchild had ended as a matter of law in 1995 when Rochelle’s mother, Robin, who had been married to Ted, died.

The obvious takeaway is the importance of designating life insurance beneficiaries.

F. Kirk Kolodner
410-576-4213 • kkolodner@gfrlaw.com.