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When Life Insurance Coverage Fails In Estate Planning (Provident Life v Brown, NC App, Oct. 19 2021)

If husband and wife divorce but fail to update their wills prior to dying, the error is cured by statute and the ex-spouse cannot inherit (N.C. Gen. Stat. § 31-5.4). There is an entirely different result under the same facts regarding life insurance policies with beneficiary designations not updated prior to death: the ex-spouse gets a windfall.

But what about when the dying spouse makes an attempt to change the beneficiary designation form, but their efforts fall short of fully complying with the requirements of the insurance company? Enter “substantial compliance” doctrine. Under the substantial compliance doctrine an error or omission in a beneficiary designation form (life insurance, POD accounts, etc.) can be overlooked and cured if and only if “all that remains to be done are ministerial acts.” If the “exercise of judgement or discretion” is required to connect the dots, the loved ones of decedent should brace themselves for the tough love of the common law.


In the October 19, 2021 North Carolina Court of Appeals case of Provident Life v Brown, the decedent was previously married and designated her then husband as the beneficiary on a life insurance policy. After their divorce, she never changed this form until being on her deathbed. However, the life insurance company rejected this form for several reasons: (1) the handwritten names were illegible, (2) some prompted information was not provided, like the relation between the decedent and an attempted-named beneficiary, (3) percentages did not add up to 100%, and (4) the decedent’s spelling of her own name did not match the insurer’s records.

Court Analysis

“An insured attempting to change the named beneficiary must make the change in the manner required by his policy and the rules of the [insurer], and any material deviation from the course will render the attempted change ineffective.” While there is some equitable wiggle room under the “substantial compliance doctrine,” that doctrine is only available when all that is missing are ministerial acts, and the doctrine is not to be applied when curing the defect would require the application of “judgment or discretion.” In this case, the Court explained how curing the defects would require both judgment and discretion: identification of beneficiaries and assignment of percentages.

The Court affirmed summary judgment in favor of the ex-spouse.


Estate Planning:

  • Though clients understandably roll their eyes at something they perceive to be unnecessary billable hours, I for one may keep a copy of this case on hand to show to clients as I suggest that they allow me to directly supervise (or at least review) the management of beneficiary designation forms. If a client plans to do it alone, ensure to advise them that they should take care to request and fill out the form independently.

  • In the face of a terminal illness, estate plan changes should be made immediately as deathbed changes will often invite scrutiny of capacity and/or undue influence.

Dispute Resolution:

  • I have had a dispute like this more than once, representing the person (a second spouse) whose inheritance was thwarted by a failure to remove an ex-spouse from a life insurance policy. I would offer my anecdotal experience that a humanely worded letter often goes farther than you think in getting money on the table from the windfall-receiving ex-spouse, even if at court they would almost certainly owe $0.00 in a suit. Of course, such a letter must not demand or suggest legal authority that does not exist (and, indeed, must be clear about such limitations). Nevertheless, in my dispute practice I often find that people want to do the right thing, especially if they are given a chance (not just served with a lawsuit). NOTE: In this case the procedural beginning of the lawsuit was actually an interpleader action brought by the insurer.

Defendant/Appellant brief by Thomas Kakassy of Kakassy Law, PLLC in Gastonia viewable online here. Plaintiff/Appellee brief by Elizabeth Ray of Crumley Roberts, LLP in Greensboro viewable online here. My sincere thanks to appellate counsel for both parties in sharing their valuable time to discuss this case and specifically to assist in suggesting takeaways for estate practitioners.

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