Law of Wills, 2016A

2. Life insurance is not subject to the creditors of the decedent. See May v. Ellis, 92 P.3d 859 (Ariz.
2004). A dies with $100,000 in unpaid debt. B receives $200,000 from A’s life insurance policy. B
does not have to pay any of A’s debt. Is that fair?
3. Slayer statutes prevent a person who intentionally murders someone from inheriting from that
person’s estate. Likewise, a person who murders the insured forfeits the life insurance money. See
Estate of Stafford, 244 S.W.3d 368 (Tex. App. 2007); Francis v. Marshall, 841 S.W.2d 51 (Tex. App.
1992).
4. Life insurance proceeds are usually not considered to be a marital asset. See Thomas v. Thomas, 54
So.3d 346 (Ala. Civ. App. 2009). A divorce decree does not impliedly revoke a former spouse as the
beneficiary of a life insurance policy. The insured must remove the former spouse as the beneficiary
on the policy. In the Matter of the Declaration of Death of Santos, 660 A.2d 1271 (N.J. Ch. 1994).
5. After the insurance company distributes the proceeds to the named beneficiary, the insurance
company has met its obligations. There is no mechanism in place to ensure that the beneficiary uses
the insurance money to pay for the insured’s funeral arrangements.
6. A takes out a $250,000 life insurance policy and names B as the beneficiary. In exchange for being
named as the beneficiary on the account, B promises to spend at least $40,000 on A’s funeral. When
A dies, B receives the money. B goes against A’s wishes and only gives A’s daughter, C, $1000 for
the funeral. Thus C cremates A instead of giving A the lavish funeral that A expected. A’s daughter,
C, is outraged by B’s actions. Does she have any legal recourse? Should she have any legal recourse?
16.3 Private Retirement Accounts
Because people are living longer it is important to plan for retirement. The main three
devices people use to save for retirement are the following: (1) defined benefit plans, (2) defined
contribution plans and (3) individual retirement accounts (IRAs). The first two are the only ones that
are relevant to this discussion because IRAs are not employee benefit plans. A defined benefit plan
is a pension plan under which an employee receives a set monthly amount upon retirement
guaranteed for their life or the joint lives of the member and their spouse. This benefit may also
include a cost-of-living increase each year during retirement. The monthly benefit amount is based
upon the participant’s wages and length of service. A defined contribution plan is a retirement
savings program under which the employer promises certain contributions to a participant’s account
during employment, but with no guaranteed retirement benefit. The ultimate benefit is based
exclusively upon the contribution to, and investment earnings of the plan. The benefit ceases when
the account balance is depleted, regardless of the retiree’s age or circumstances.
After the owner of a retirement account dies, the person listed as the beneficiary has the legal right
to take control of the funds in the account. Like life insurance, the person who contributes to a
retirement account can control the distribution of the money in the account by designating the
beneficiary. However, in order to change the beneficiary of the account to someone other than his
or her spouse, the owner of the retirement account must receive his or her spouse’s consent. These
accounts are controlled by two federal laws, the Retirement Equity Act (REA) and the Employee
Retirement Income Security Act (ERISA), that limit the application of certain state laws to
retirement accounts.
694