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Changes to Beneficiary Designations During Pendency of Divorce Case

Divorce is usually a lengthy process of reaching agreements pertaining to assets and family time. Once a divorce case is filed with the court, a temporary injunction is put in place, where neither party can dispose of marital assets. The court will eventually issue its ruling about how assets are divided. But what happens if one party to the divorce changes beneficiary designations to assets while the divorce case is pending but dies before the divorce decree is issued? Do the new designations stand?

Arnold and Jacquelyn had filed divorce proceedings to end their marriage. While the case was pending, Jacquelyn changed the primary beneficiaries of her IRA account from Arnold to her adult children. She also opened up a new bank account, which had a transfer-on-death feature, naming her children as beneficiaries. Jacquelyn died before the divorce was finalized. Her IRA account and bank account were passed to her children. Arnold filed suit, stating that those assets were marital property and should belong to him.

The trial court ruled in favor of Arnold, stating that Jacquelyn’s actions violated the automatic temporary injunction in the divorce case. The case was appealed and now there is this instant opinion from the Supreme Court of Oklahoma. Are Arnold or the children entitled to Jacquelyn’s assets?

The children argued that the divorce case was abated as of Jacquelyn’s death. Thus, the court no longer had authority in the case and could not enforce the injunction. The Supreme Court of Oklahoma agreed. The question for them wasn’t whether Jacquelyn violated the injunction but rather whether the court could enforce the injunction after the divorce case was abated.

The court reasoned that a divorce case was purely personal and that if one party dies before the final decree, the cause of action terminates and the court loses jurisdiction over the parties. Because Jacquelyn’s death dissolved the marriage, the court lost jurisdiction over the case at that time. However, there is a district split on whether this loss of jurisdiction also means that the court cannot enforce the temporary injunction. Some states maintain that jurisdiction is lost; some states maintain that the court retains its equitable power to enforce the injunction. The Supreme Court of Oklahoma joins the former group. Jacquelyn’s death caused jurisdiction to be lost in the case and her new beneficiary designations are upheld.

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