A routine doctor’s appointment started it all for the family. During an exam, Ray Razo was told he had a serious condition and sent directly to a hospital for emergency tests. They learned he had the unthinkable: stage 4 pancreatic cancer.
Ray was like a father to his nephew Eddie. He’d signed his life insurance beneficiary papers over to him in 2013, before he retired from General Motors. But when Ray checked himself out of the hospital after refusing chemotherapy, he came home to the Southern California house he was renting with Eddie’s brother Charles and Charles’ wife, Lisa. A hospice nurse helped them manage his pain and anxiety and keep him sedated.
Days later, Ray summoned Charles and Lisa: He wanted Charles to have power of attorney over him so he could manage his final affairs while they cared for him. They quickly called a lawyer recommended by one of the hospice nurses. On May 2, 2017, with Charles, Lisa, and the lawyer as witnesses, Ray signed the Statutory Short Form Power of Attorney—which, notably, did not include the authority to change a life insurance beneficiary.
With Ray’s condition worsening, Lisa contacted MetLife on May 25 and requested a change of beneficiary form, which was quickly faxed to her. She filled it out and listed Charles as the primary beneficiary. Charles signed it, noting he had Ray’s power of attorney. Ray, however, did not sign it. They faxed it back to MetLife the same day, court records show.
Two days later, Ray died. Within the week, MetLife rejected the form: MetLife had competing claims from Eddie and Charles for their uncle’s life insurance proceeds. It filed a lawsuit to determine who would get the money.
A district court ruled Ray’s power of attorney didn’t give Charles the right to change a beneficiary. In addition, it noted that the law requires that a beneficiary change must follow the company’s rules in the policy with three exceptions: (1) when the insurer waives strict compliance with its own rules; (2) when it is beyond the insured’s power literally to comply with the insurer’s requirements; or (3) when the insured did all he could to change the beneficiary but died before making the change. The court’s decision stated that only the third exception might be relevant, but it concluded that evidence of Ray’s desire to change was insufficient, particularly considering that Ray did not sign Lisa’s beneficiary change form. The court awarded the money to Eddie.
Dying loved ones can be vulnerable to greedy relatives. Consult an estate attorney for ways to protect them and their final wishes. Metropolitan Life Insurance Company v. Razo (No. 2:18-CV-04751-SVW-SS) Not Reported in Fed. Supp. [2019 WL 211649]
About the author:
John O’Grady leads a full-service estate and trust law firm in San Francisco. His practice includes estate planning & administration, probate and trust litigation.