Colorado law – Does an ex-spouse get the life insurance?

Posted by: Oct 30, 2015By Brian Stutheit

Colorado statutes say a divorce or annulment revokes beneficiary designations to the former spouse.  The life insurance policy is treated as if the former spouse died before the spouse whose life was insured.  COLO. REV. STAT. section 15-11-804.  This Colorado rule has exceptions.

The two spouses may agree that the former spouse will continue to be the life insurance beneficiary by a contract relating to the division of the marital estate made between the divorced individuals before or after the marriage.  Upon divorce, the court may also order that a former spouse continue to be the beneficiary of the insurance policy.  We recently had a case where the spouses got divorced, the husband told other people he intended to keep the former spouse insured, but there was no contract or court order protecting the former spouse.  The former spouse lost the life insurance proceeds to surviving family of the husband.  If the former husband had a will which showed he intended to continue the insurance for his ex-wife’s benefit, the former spouse might have won.

If the insurance is subject to the ERISA law, the beneficiary designation controls who receives benefits.  ERISA supersedes state law, so Colorado’s statute revoking the rights of the ex-spouse does not apply to ERISA life insurance plans.  The last named beneficiary will receive the life insurance regardless of whether the beneficiary is still married to the decedent. The Employee Retirement Income Security Act (ERISA) governs employees’ rights to benefits offered through their employers such as pension plans, disability insurance, life insurance, accidental death and dismemberment insurance, and other employer-sponsored benefits. ERISA does not apply to life insurance policies purchased outside of policies that your employer offers, or  policies purchased by business owners for themselves, which do not cover employees.

Heirs who discover that the dead spouse did not remove his former spouse as primary beneficary should immediately give written notice to the insurance company that there was a divorce, because the insurance company is not liable for making a payment before it is informed the couple were divorced. The written notice must indicate the name of the decedent, the name of the person asserting an interest in the insurance, and a statement that a divorce, annulment, or remarriage of the decedent and the designated beneficiary occurred. The written notice must be mailed to the payor’s main office by registered or certified mail, or served upon the payor or other third party in the same manner as a summons in a civil action.

Divorce also voids a nomination in a governing document such as a will or trust of the divorced individual’s former spouse to serve in any fiduciary or representative capacity, including as personal representative, executor, trustee, conservator, agent, or guardian.