Unlike civil litigation, a divorce rarely ends with the entry of the Judge’s decision. Once a Final Judgment is entered, parties generally must transfer financial accounts and real property, cancel joint credit cards, change a variety of insurance policies must be changed.
With all of these tasks to accomplish, and often very little guidance on how to proceed; it is little wonder that parties often forget to change the beneficiary designations on their financial (and life insurance) accounts. After all, it is hard enough to remember to make these designations in the first place and they are generally not top-of-mind when something as traumatic as a divorce takes place.
Unfortunately, on several occasions neglecting this task has created some real problems when a party unexpectedly dies. Until recently, the law in the State of Florida was that the named-beneficiary on an account was entitled to recover any survivorship benefits even if it is a former spouse who the decedent clearly forgot to remove. In fact, in the case of Crawford v. Barker, the Florida Supreme Court went so far as to hold that the beneficiary designation on file with a financial institution prevails as a matter of law over contrary language in a Marital Settlement Agreement. The Court’s recognized the potential problems associated with this holding but held that public policy dictated this result so that there was no post-death confusion over who was to receive the funds.
This interpretation, which is certainly legally sound, has led to several inequitable situations in which funds are provided to a former spouse over a decedent’s children or surviving family. In these case, everyone (even the recipient) acknowledges that the decedent would have changed the designation had he or she thought about it; but the black letter law left no room for trying to effect a fair and just result. Therefore, these situations invariably led to an unintentional windfall on the part of an estranged former spouse.
Fortunately, the Florida legislature acted by enacting § 732.703. This law holds that a beneficiary designation shall be null and void upon the entry of a Final Judgment of Dissolution of Marriage. Instead, where this designation has not been changed, any survivorship benefits will pass to the decedent’s estate. (The statute is effective for any cases where the decedent died after July, 2012.)
In passing this law, the Florida legislature truly did something amazing for a political body . . . it saw a problem and it acted to resolve it in a reasonable and thoughtful way.