NH Supreme Court Rules On Beneficiary Change During Divorce
The New Hampshire Supreme Court has decided that changing beneficiaries on life insurance or retirement assets during divorce proceedings does not violate the anti-hypothecation order issued at the beginning of all divorce proceedings.
What does this mean? Let me explain the anti-hypothecation order first. After someone files a petition for divorce, the court issues a general order that prohibits either spouse from selling, transferring, encumbering, hypothecating, or disposing of marital property while the divorce is pending. Family Law practitioners and marital masters generally used to consider a change in beneficiary to fall under this broad prohibition.
With its decision in Etler-Nodvin v. Nodvin, issued June 12, 2012, the New Hampshire Supreme Court decided that a person's status as a beneficiary is not a vested property interest. In other words, beneficiary status is not marital property. So, a spouse could change his or her beneficiaries before the divorce was final, as long as there is no other court order specifically prohibiting beneficiary changes.
In the Etler-Nodvin v. Nodvin case, the husband changed beneficiaries of his life insurance and retirement assets from his wife to his children, then died before the divorce was final. The result was that some of the marital assets then belonged to the children. The divorce was moot, and the wife no longer had any rights to those assets.
How, then, can you protect your interests during a divorce? Obtain a specific order from the court prohibiting any changes to beneficiaries.
What does this mean? Let me explain the anti-hypothecation order first. After someone files a petition for divorce, the court issues a general order that prohibits either spouse from selling, transferring, encumbering, hypothecating, or disposing of marital property while the divorce is pending. Family Law practitioners and marital masters generally used to consider a change in beneficiary to fall under this broad prohibition.
With its decision in Etler-Nodvin v. Nodvin, issued June 12, 2012, the New Hampshire Supreme Court decided that a person's status as a beneficiary is not a vested property interest. In other words, beneficiary status is not marital property. So, a spouse could change his or her beneficiaries before the divorce was final, as long as there is no other court order specifically prohibiting beneficiary changes.
In the Etler-Nodvin v. Nodvin case, the husband changed beneficiaries of his life insurance and retirement assets from his wife to his children, then died before the divorce was final. The result was that some of the marital assets then belonged to the children. The divorce was moot, and the wife no longer had any rights to those assets.
How, then, can you protect your interests during a divorce? Obtain a specific order from the court prohibiting any changes to beneficiaries.
Comments
Post a Comment