Decedent’s Decision to Change Beneficiary may be Effective

In Illinois, a decedent’s decision to change the beneficiary designation on a life insurance policy , individual retirement account, transfer on death account or other similar instrument may be effective even if the decedent did not sign the change of beneficiary form or comply with all of the institution’s technical requirements for making changes to the beneficiary designation.

In  Dooley v. James A. Dooley Associates Employees Retirement Plan , the Illinois Appellate Court addressed possible tests used by Illinois courts for determining whether a decedent’s intent to change a beneficiary designation is effective and what must be done to accomplish the change without actually signing the change of beneficiary form.

The first test which is applied, either explicitly or implicitly, is “substantial compliance with the policy requirements” test to determine whether steps taken by a decedent were sufficient enough to change the beneficiary. The second test, a somewhat stricter test, looks to determine whether the decedent “did all he could” to effectuate the change.

Review of Illinois Case Laws

A review of Illinois case laws suggests that Illinois courts seem to combine the two tests, inquiring whether the decedent did all he could to effect the change in order to determine whether there was substantial compliance with the requirements. In applying either test, the overriding concern regarding the threshold question is the firmness of decedent’s intent as to the changes.

Under  Dooley , “Substantial compliance requires (a) a clear expression of the insured’s intention to change beneficiaries, plus (b) his concrete attempt to carry out his intention as far as was reasonably in his power. Intent alone is not sufficient. In addition, the insured must have done all he reasonably could do under the circumstances to carry his intention into execution” Furthermore, the Court made it clear in  Dooley  that certainty of intent alone is not sufficient to accomplish a change of beneficiary – there must be a combination of intent to make the change and positive action towards that end.

Requiring that the evidence establish an unequivocal intent on the insured’s part and that he take positive action to change his beneficiary serves two purposes: doubt as to the intent is eliminated and concrete evidence of that intent is provided the payor. In  5 Couch on Insurance section 28:72, at 175 (2d ed. 1960),  it is stated that compliance must be “sufficient to give assurance of the authenticity of the insured’s desire to bring about a change and to provide trustworthy evidence of that desire to the insurer.”

Therefore, the death of an account owner before said owner actually executes the paperwork or goes through all of the formal steps necessary to effectuate a change of beneficiary designation does not mean that said intent to change of beneficiary designation is completely lost. Though said failure to actually formally change the beneficiary designation creates an uphill battle for anyone attempting to argue that the decedent’s intention to change the beneficiary designation should be enforced, Illinois courts will permit the recognition of the change in beneficiary decision if substantial compliance can be proved. “Substantial compliance” requires (1) a clear expression of the insured’s intention to change beneficiaries and (2) his concrete attempt to carry out his intention as far as was reasonably in his power.

Conclusion

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