NJ Appellate Judge Harry Carroll (Carmen Natale)
A New Jersey appeals court has refused to create a bright-line rule that says marriage creates a presumptive right for a spouse to receive the benefits of his or her partner’s life insurance benefits if the deceased previously had designated someone else as the beneficiary.
A three-judge Appellate Division panel, in a Feb. 24 published decision in Fox v. Lincoln Financial Group, said the creation of any such presumptive right would have to come from the Legislature.
The ruling involves a Brazilian national, Evanisa Fox, who married a Morris County, New Jersey, man, Michael Fox, in July 2012, according to the opinion. He previously had been married to another woman, identified in the ruling only as Gail.
Fox, a truck driver, had a life insurance policy through his employer that was worth about $100,000, the opinion said. After his divorce from Gail, Fox in 1996 designated his sister, Mary Ellen Scarpone, as the sole beneficiary of his policy.
After Michael Fox and Evanisa Fox married, he began taking steps to have her become a naturalized citizen, including signing a federal immigration form guaranteeing that he would support her at 125 percent of the poverty level, the opinion said.
He did nothing, however, toward changing the beneficiary of the life insurance policy from his sister to his new wife before he died in an accident on Nov. 9, 2012.
After his death, Evanisa Fox filed a claim against Scarpone and Lincoln Financial Group, which issued the policy, for the life insurance funds, saying it would be “‘extremely difficult for me to survive without his support,’” the opinion said.
Scarpone challenged the claim. Superior Court Judge Stephan Hansbury dismissed Evanisa’s claim, saying there was no statutory basis to change the beneficiary of a life insurance policy merely because of marriage, absent some affirmative effort to do so by the policyholder before death.
Evanisa Fox appealed, asking the Appellate Division to create a bright-line rule that a spouse has a presumptive right to a partner’s life insurance policies, even if someone else is the named beneficiary.
“We reject Evanisa’s broad public policy argument, and hold that her marriage to Michael, without more, is insufficient to defeat Scarpone’s beneficiary status,” Appellate Division Judge Harry Carroll said. Judges Carmen Alvarez and Alexander Waugh Jr. joined in the ruling.
Carroll said the appeal presented a single question: “[S]hould … the law of insurance reflect the changed circumstances attendant to marriage in the way it reflects changed circumstances with respect to divorce?”
The appeals court refused to make that change in the law.
“We decline to do so, and would instead leave so drastic a change to the Legislature,” Carroll said.
Carroll noted that the Legislature enacted N.J.S.A. 3B:3-14, which provides that divorce automatically revokes a disposition of property made by a divorced spouse to his or her former partner in a “governing instrument,” which he said by definition includes an insurance policy.
“It could similarly pass legislation granting presumptive beneficiary rights to a spouse upon marriage should it determine to do so,” Carroll said.
Also, Carroll said lawmakers enacted N.J.S.A. 3B:5-15, which provides an intestate share to a surviving spouse unintentionally omitted from a premarital will because of the presumption that the spouse who wrote the will intended to provide for the spouse.
That statute, however, does not cover nonprobate assets, such as life insurance policies, Carroll said.
“We presume that in enacting this statute, the Legislature was aware of this distinction,” Carroll said. “In any event, it is within the province of the Legislature to expand the statute to provide an omitted spouse with an intestate share of life insurance proceeds, or to enact some other appropriate statutory remedy.”
Evanisa Fox argued on appeal that a ruling in her favor would be a logical extension of the state Supreme Court’s 1991 ruling in Vasconi v. Guardian Life Insurance Co. In that case, the court ruled that there is a presumption that a divorced spouse should no longer be the beneficiary of a deceased ex-spouse’s life insurance benefits, even if he or she was still listed as the beneficiary.
Evanisa Fox argued that the case could also be an extension of the Appellate Division’s 1993 ruling in DeCeglia v. Estate of Colletti. That case involved a man who had named his mother and sister as beneficiaries of several life insurance policies. After his live-in girlfriend became pregnant, according to court documents, the man discussed with a lawyer and his insurance agent naming his girlfriend as the beneficiary to ensure that his child would be taken care of. He unexpectedly died, however, before actually changing the beneficiary.
The appeals court ruled in the girlfriend’s favor, saying her boyfriend intended to change the beneficiary.
There was no such evidence of intent in this case, Carroll said.
Evanisa Fox’s attorney is Morristown, New Jersey, solo Michael Patrick Carroll—no relation to the judge—who is also a Republican assemblyman from Morris County. He said he will ask the state Supreme Court to hear an appeal.
“This is one of those rare cases where it would have been O.K. for the courts to legislate from the bench,” he said, adding that he will not use his position as a legislator to push for a change in the statutes.
It is not proper to sponsor legislation that would benefit a client, he said.
“Even though I wouldn’t benefit, it would look kind of cheesy,” he said.
Scarpone’s attorney, Benjamin Kurtis, said the appeals court made the correct call.
“We think the law was very clear and that the deceased took no action to change the beneficiary,” said Kurtis, of the Princeton, New Jersey, office of Fox Rothschild. “He clearly knew how to do so because he had done so before.
“This is not the kind of issue that should be resolved by the court,” Kurtis said. “It’s an issue best addressed by the Legislature.”
Liberty deposited the life insurance funds with the court and was dismissed as a party before the trial.