Changing life insurance beneficiaries during a nasty divorce may not stick

By Rebecca Theim on August 5th, 2010

If you're involved in a nasty divorce or child support battle, you may have considered changing the beneficiaries on your life insurance policy. However, simply changing beneficiaries doesn't mean your child or soon-to-be-ex-spouse won't receive the life insurance benefit in the event of your death. Just ask 7-year-old Galen Hopper, the youngest child of the late legendary film star Dennis Hopper.

Hopper, who passed away in May 2010 after a battle with prostate cancer, filed for divorce from his fifth wife, Galen's mother, Victoria Duffy-Hopper, in January. Shortly afterward, he changed the beneficiaries of his $1 million life insurance policy, in an attempt to exclude Galen and her mother from receiving any of it. Instead, Hopper tried to leave the proceeds from the life insurance policy to his three adult children from previous marriages.

But Duffy-Hopper challenged the change in California court, and in the first round of what is expected to be a legal battle royal, a judge sided with her, agreeing that the policy should be split among Hopper's four children and Duffy-Hopper.

The court battle continued past Hopper's June 2 funeral.

Before Hopper's death, a judge granted Duffy-Hopper and Galen the right to remain in a separate house on Hopper's Los Angeles-area property until the court settled the divorce. Hopper also was ordered to pay $12,000 monthly in spousal and child support.

A critical issue in the upcoming legal battle in probate court will be the terms of the pre-nuptial agreement Duffy-Hopper and her husband signed. It granted Duffy-Hopper 25 percent of Hopper's estimated $30 million estate and $250,000 of the $1 million life insurance payout--but only if they were married and living together when Dennis died. Although he filed for divorce almost five months earlier, Hopper and his estranged wife were still legally married, but the "living together" clause in the prenup is expected to be pivotal to the final outcome of the probate proceedings.

The issue is whether or not living in side-by-side houses constitutes "living together." Duffy-Hopper is expected to argue that because she was living on Hopper's property, she meets that requirement.

Duffy-Hopper is also expected to contend that Hopper's adult children exerted undue influence on their seriously ill father in his final months, and masterminded the divorce to exclude her and her daughter from receiving a portion of Hopper's estate.

It's been reported that in March Hopper drafted an amendment to his estate plan, in which he reduced Galen's share of his estate from 40 percent to 25 percent. Under California law, however, that amendment may be invalid because estate plan changes are tightly restricted when a divorce is pending.

Besides Galen Hopper's share, Duffy-Hopper is arguing that she should receive 25 percent of Hopper's total estate, while Hopper's adult children have countered that she should receive nothing.

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