21 May Deathbed Incomplete Beneficiary Designation Form Determined Valid Benefitting Ex-Spouse Instead of Spouse
A Federal Court of Appeals recently ruled that a failure to complete the entire beneficiary designation form did not invalidate the designation since it was in writing, signed, witnessed and received by the proper office before his death.
Gary Herbert (“Gary”) and Kathleen (“Kathleen”) Herbert were married in 1991 and had 2 children. Gary and Kathy divorced in 2015. Gary married Tiffany Donahue-Hebert (“Tiffany”) in 2016. Both were hospitalized later that year (Gary had stomach cancer). Since Tiffany was in the hospital when Gary was discharged, Gary stayed with relatives of Tiffany until they took him to the hospital because he was “experiencing confusion”. He was discharged the same day. A friend picked him up and took him to the home of Kathleen where he stayed until his death.
Before he died in 2017, while staying with Kathleen, he signed and dated a beneficiary designation form of his Federal Employees Group Life Insurance policy (“FEGLI”) before 2 disinterested witnesses naming Kathleen as the beneficiary. However, he didn’t check off all the boxes of the form. The form was returned 5 days later indicating receipt but not processed since all the boxes weren’t checked. Two weeks later, Gary asked Kathleen to complete the missing information. He died the next day, and Kathleen faxed the completed form the day after his death. Under federal law, if you don’t name a beneficiary then it passes by a statutory preference which would be his wife, Tiffany.
Kathleen brought suit in 2018 against the insurance company and the government which was going to pay the proceeds to Tiffany who subsequently died in 2020. Kathleen claimed that the designation form originally sent was valid. In 2022, the district court entered a memorandum and procedural order agreeing with Kathleen but gave the parties “a last opportunity to develop the record further” since Tiffany’s daughter, (“Karissa”), who was acting as representative of her mother’s estate, claimed Gary lacked mental capacity in addition to the form not fully being completed prior to his death.
An evidentiary hearing was held in January 2024. Witnesses for both sides testified including as to the mental capacity of Gary. Two months later, Karissa subpoenaed Gary’s medical providers for his medical records. They refused (due to HIPAA laws) unless there was a court order. Karissa requested more time to get the medical records extending the discovery deadline 2 more months. Over a month after the deadline expired, she asked for another extension claiming Kathleen did not cooperate since she didn’t agree to release the medical records. The court denied her request stating she never requested the court’s assistance to get the medical records. Subsequently, the court ruled in favor of Kathleen. Karissa appealed.
The appellate court did not think the district court abused its discretion in failing to further extend the discovery deadline. Her request lacked details such as doctors and medical facilities that had the records. The Court of Appeals ruled Karissa should have known that she would have needed medical records prior to the evidentiary hearing which was 6 years after the original lawsuit was filed. Citing federal law, the court ruled that since the beneficiary form was signed and witnessed in writing, it was sufficient. The intent of the insured was clear.
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