Support and life insurance payouts

[Exquizique]

Someone posed a scenario to me the other day and I thought i would get some input/thoughts from this forum:

Parent A and Parent B are divorced. The two children of the marriage reside with Parent A, who has sole custody. Parent B pays spousal and child support to Parent A. in their court order, it is ordered that Parent B shall maintain a life insurance policy from Parent B's workplace in the sum of $200,000 (for example) and name Parent A the irrevocable beneficiary for as long as Parent B is obligated to pay support to Parent A.

Let's say Parent B passes away due to an accident. After clearing off debts and other liabilities, there is no money left in Parent B's estate. Parent A discovers that contrary to the court order, Parent B did not name Parent A as the irrevocable beneficiary on the policy from work, and also reduced the value of the policy to, say, $50,000. Parent B had named his/her new spouse as beneficiary for the now $50,000 policy, and to a new $300,000 policy purchased outside of the workplace. Both amounts have been paid to the new spouse/beneficiary.

What is Parent A's recourse for recouping funds ordered for support? Can Parent A have a court direct that the insurer pay out the funds to Parent A? Can Parent A file a claim personally against the new spouse for the amount?

[mom2three]

That's an interesting scenario. The thing that stuck out at me was the fact that a court order was made but the irrevocable beneficiary never ensured that the policy was not changed to reflect the court order.

While Parent A certainly could have a claim against the proceeds, it is/was her/his responsibility to see that the court order was followed.

[OrleansLawyer]

Can Parent A have a court direct that the insurer pay out the funds to Parent A?

No. The insurance company will follow their policy. They are not a party to the family matter nor does the Order impact them.

Let's say Parent B passes away due to an accident. After clearing off debts and other liabilities, there is no money left in Parent B's estate.

If there is no money left in the estate then Parent A gets nothing.

Both amounts have been paid to the new spouse/beneficiary.

If they aren't paid into the estate then a suit against the estate - the sole recourse for Parent A - would not be able to touch the money.

Can Parent A file a claim personally against the new spouse for the amount?

On what grounds?
Short answer - it would not be successful.

[billm]

Unrelated side note - the court should have also ordered Parent A to have a policy with Parent B as the beneficiary.

[mom2three]

The following link would seem to support the notion that a claim would be successful against the new spouse:

The ex-spouse, child support and the insurance policy - Fiscal Agents Money Management Newsletter - Canadian

Unfortunately I haven't been able to find the case yet.

[Exquizique]

Unrelated side note - the court should have also ordered Parent A to have a policy with Parent B as the beneficiary.

I happen to agree with such a position. What's good for the geese is good for the gander ... or however the saying goes. Responsibility of both parents and all that.

Thanks so much for your very concise and interesting answers Orleanslawyer!!!

The following link would seem to support the notion that a claim would be successful against the new spouse:

That's why i found the above scenario so interesting. I've read conflicting things about what recourse is available to a person in Parent A's position. On one hand, the "official" line i've read/heard is that if there's no money in the estate, and the new spouse is the named beneficiary, then despite whatever a court order says, Parent A is SOL. However, I've also done research on Canlii and read a couple of cases where the ex spouse actually successfully sues the new spouse to repay the money that was paid out to them (sorry don't have the links handy, will look it up over the weekend) ... i don't know, perhaps being a layman i'm missing some legal nuance or technicality ...

Anybody here gone through or actually know someone who's gone through Parent A's situation?

Orleanslawyer, perhaps you can comment on the case described in Mom2three's posted link??

[paris]

I saw a case on Canlii where the new spouse had to pay the proceeds to the ex-spouse. I'll see if I can find it later.

[Exquizique]

I saw a case on Canlii where the new spouse had to pay the proceeds to the ex-spouse. I'll see if I can find it later.

I think you and i saw the same case. I just have to remember the search terms i used to make it show up again lol ...

[OrleansLawyer]

the court should have also ordered Parent A to have a policy with Parent B as the beneficiary.

The courts do not have the power to order someone to obtain a life insurance policy, only to designate the beneficiary of an existing policy.

[Frustrated_DAD]

That's interesting. My Divorce Order with my Ex states she must maintain a Life Insurance Policy with the Children being listed as the beneficiary.

So if she decides to change or cancel that policy and not have the children on as a beneficiary on a new one - then passes away then they are entitled to zero - from what I am hearing.

[DowntroddenDad]

My separation agreement says the same thing, there is a clause that if I leave my employer, I must ensure that I have equivalent coverage within XX days.

[OrleansLawyer]

So if she decides to change or cancel that policy and not have the children on as a beneficiary on a new one - then passes away then they are entitled to zero - from what I am hearing.

Claim arising from breach of contract.

[billm]

That's interesting. My Divorce Order with my Ex states she must maintain a Life Insurance Policy with the Children being listed as the beneficiary.

Does your divorce order require you to have a similar policy?

[billm]

My separation agreement says the same thing, there is a clause that if I leave my employer, I must ensure that I have equivalent coverage within XX days.

Does your separation agreement require your ex to have a similar policy?

[Frustrated_DAD]

Yes my Divorce Order requires me to hold a Life Insurance Policy with the children as the beneficiary also.
I have one that is more then double what is required since I am the only Parent supporting the children.