Settling life insurance beneficiary disputes involving Minors

Very often life insurance beneficiary disputes are settled. Sometimes they are settled fairly quickly sometimes the parties will litigate for a year or more and settle just before trial. They may even settle after trial pending an appeal.

Generally courts are thrilled when the parties settle the case the court doesn't really ask questions or second guess the settlement. But there is one important exception and that is when the settlement involves a minor. Courts want to protect the interests of a minor and in that situation the judge will often require that the parties obtain approval for the settlement.

An example is a case out of federal court in California earlier this year. In that case there was a dispute over a half million dollars worse worth of life insurance proceeds. The dispute involved the former wife of the deceased insured and the current wife of the deceased insured and also a couple of minor children. The parties ended up settling the dispute but then they had to reach out to the court to have the court analyze the terms of the settlement and then approve the settlement.

The court noted that, because the proposed settlement involves minors, it must be approved by this court. The court also said it was going to apply California law because in interpleader actions brought in federal court based on diversity jurisdiction, courts apply state law to evaluate settlement agreements involving minors

The court also said that district courts have a special duty to safeguard the interests of litigates who are minors or who are incompetent. It could be an adult with disabilities or incapacities where they've been declared incompetent to handle their own affairs and potentially a guardianship has been established for that adult

In the context of proposed settlements and suits involving minors the special duty requires a district court to conduct its own inquiry to determine whether the settlement serves the best interests of the minor or the incapacitated person. In this case, the court reviewed the terms of the settlement and it noted that one child was going to be receiving more of the life insurance proceeds than the other child. However the court found that that was fair and reasonable because one of the children was disabled and the other child was not.

It is very important to understand that while many of these cases settle if your case involves a minor but involves a minor. That is another reason why it's important to have a lawyer involved in your case who understands life insurance beneficiary disputes and the means of both litigating them and settling them, along with proper procedure to bring those before the court.