A federal district court in Pennsylvania has ruled that the estranged wife of a doctor who committed suicide was entitled to the proceeds of a life insurance policy on his life, notwithstanding his attempt to remove her as beneficiary, where the couple previously had reached a marital settlement agreement that allocated the policy to her.

The case

After Kelly O. Justofin married Dr. Christopher D. Justofin, New York Life Insurance Company issued a life insurance policy on the life of Dr. Justofin with Ms. Justofin as the primary beneficiary.

In February 2013, the Justofins, who had become estranged, jointly executed a marital settlement agreement that contained a section that set forth the various types of marital property the couple owned and designated the assets that should belong to each party.

On July 15, 2013, Dr. Justofin executed a change of beneficiary request redesignating Twila Bankes, as custodian for a minor child, as the sole beneficiary of his New York Life policy.

Five days later, and before New York Life had updated its records to reflect the change of beneficiary request, Dr. Justofin committed suicide.

Competing claims for the proceeds of the policy were made by Ms. Justofin and the minor’s custodian, Ms. Bankes. New York Life paid the proceeds of the policy – $400,000 – into a federal district court in Pennsylvania and asked the court to determine the proper beneficiary.

The court’s decision

The court ruled that Ms. Justofin was entitled to the proceeds.

In its decision, it found that the agreement executed by the parties in February 2013 established that, even if Dr. Justofin’s mental state was one of legal competence at the time he had executed the change of beneficiary request, he no longer had the legal capacity to alienate Ms. Justofin’s interest in the policy when he purported to change his beneficiary.

The court noted that the agreement conferred sole ownership of the parties’ marital residence on Dr. Justofin, extinguished any claim Ms. Justofin had to her husband’s pension or profit-sharing benefits, and extinguished any right or claim by Ms. Justofin to spousal support or alimony pendente lite. The court added that the parties also agreed “that their (his and his wife’s) whole life insurance policies shall be wife’s sole property, including, but not limited to, any cash value in said policies.”

Thus, the court reasoned, because the agreement had become effective at the date both parties had executed it, Ms. Justofin had become the equitable, if not the nominal, owner of the policies on that date. The court stated:

Because Dr. Justofin had relinquished ownership of the life insurance policies, he simply had no right in July, 2013 to execute a change of beneficiary request with respect to an asset he no longer possessed.

The court then enforced the contract.

The case is New York Life Ins. Co. v. Justofin, No. 3:13–CV–02110 (M.D. Pa. March 25, 2014). Attorneys involved include: Deborah H. Simon, Elliott Greenleaf & Siedzikowski, PC, Blue Bell, PA, John G. Dean, Elliott Greenleaf & Dean, Scranton, PA, Thomas L. Kennedy, Kennedy and Lucadamo, P.C., Hazleton, PA, Daniel John Distasio, Jr., Distasio & Kowalski, LLC, Wilkes-Barre, PA, Noah G. Naparsteck, Derr, Pursel, Luschas & Norton, LLP, Bloomsburg, PA, for Defendants.