Anyone can contest a beneficiary designation. However, the chances of winning the case is at best, slim, even if you're the spouse of the deceased. Life insurance beneficiary designations are difficult to contest in Michigan, just as they are in any state. There are a few cases where you might have a leg to stand on when it comes to contesting and winning. In most cases, arbitrating or mediating the claim is the best action.
Beneficiary Designations Follow the Same Rules
In most cases, when you assign a beneficiary, regardless of whether it's life insurance or a pension plan, the laws remain the same. Only the owner of the plan or policy can make the decision who receives the funds. (Although in cases of qualified pension plans, the spouse must sign off if the owner of the plan names someone else.)
Kennedy v. Dupont
The court case Kennedy v. Plan Administrator for Dupont Savings and Investment Plan involved the beneficiary of a pension plan. The estate lost the case even though the ex-spouse gave up any rights to the proceeds in the divorce agreement. Although the case involved a qualified pension plan, beneficiary law for life insurance is the same. The deceased never changed the beneficiary and even though the daughter, executor of the estate, took this to the U.S. Supreme Court, she lost when the court sided with the administrators of the plan to give the ex-wife the money.
In some cases, there may be a ray of hope of winning when you contest a beneficiary. If the beneficiaries are all children named at the time of policy issue, and it seems the intent of the insured was to split the funds equally among all children, a child born later might have grounds to contest the beneficiary designation.
Under Your Spell
Another situation that has the potential of being successful is if the insured changes the beneficiary after demonstrating incompetence. A last minute beneficiary change in this case could spell fraud or illegal manipulation of the insured. If the insured was incompetent, coerced or under duress when he made the beneficiary change, there is potential for contesting the beneficiary designation.
In most cases, it takes a long time and a lot of money to take the issue to court. If the funds are necessary to pay the funeral cost, see if you can mediate an agreement where the beneficiary pays these costs in exchange for not going to court. Even if you believe you have a legitimate case, unless you have ironclad proof of coercion or fraud, mediation and settlement are often win-win situations for both parties. In the end, the money you save in court expenses often means both parties receive as much as one court winner would have.