The Kenwood Press
: 03/01/2019

Elderlaw Advocates March 1, 2019

Len Tillem & Rosie McNichol

Dear Len & Rosie,

An acquaintance of mine had been married for about one year. Her husband just died tragically. At the time of his passing, he had not yet changed the beneficiary on his life insurance policy to his wife. His parents are still named as the beneficiary. Does the surviving wife have any claim on the life insurance, or is she out of luck? It’s certain that some of the premium payments would have been paid with community property funds.


Dear Randy,

As a rule of thumb, whenever anyone gets married or registers as a domestic partner with the California Secretary of State, it’s time to take a look at all estate planning documents, including pension and life insurance policy beneficiary designations.

It’s also important to understand that it doesn’t matter what a will or trust may say about life insurance policies, annuities, and retirement accounts. These accounts will pass to their designated beneficiaries no matter what the estate plan says. If you want to change who gets your life insurance or retirement accounts upon your death, the only way to do it is by filling out new beneficiary forms obtained from the life insurance company or retirement account custodian.

Your friend’s rights depend on what kind of insurance her husband held, and the source of payment of the policy premiums. If he owned a fully paid up whole life policy, and didn’t make any policy payments during the marriage, then your friend has no rights at all. The policy was her husband’s sole and separate property. The same thing applies if her husband somehow paid the policy premiums from separate property assets, such as inherited or gifted money, or assets he already had prior to the marriage, including income earned by separate property.

If, however, he paid the policy premiums out of his earnings, and there’s no pre-nuptial agreement saying his earnings are separate property, then he used community property, half owned by his wife, to pay for his insurance. Under California law, a spouse cannot give away community property without the consent of both spouses. So, your friend would have a claim on part of the life insurance.

If the policy is a term life policy with no cash surrender value and the premiums were paid after the date of the marriage with community income, then she should be entitled to a full half of the proceeds of the insurance. If, however, the insurance is a whole life policy that is part insurance, part investment, then she won’t get half. She’ll be entitled to only half of the portion of the policy purchased with community property.

She should contact the life insurance company. They’ll put a hold on distributing the policy so that she and her husband’s parents can work it out. If they can’t, the life insurance company will likely surrender the policy to the court in a legal procedure called “interpleader” and allow your friend and her in-laws to fight over the policy in court without the insurance company’s further involvement.

Len & Rosie