Death benefits from life insurance policies: Revocation by heirs prevents intended gift
The District Court of Frankenthal (Case No.: 8 O 282/21, Judgment of 14.11.2022) recently addressed the legal framework conditions that must be observed in the attempt to make a gift of a death benefit from a life insurance policy. The proceedings illustrate the complexity and multifaceted nature of assigning claims from life insurance contracts in the event of inheritance.
Facts and subject matter of the lawsuit
In the case in question, a deceased policyholder, a few days before her passing, attempted to transfer the pay-out claims from her existing insurance policy to a close associate by sending a letter to the life insurer. After the inheritance took effect, the deceased’s heirs objected to this order. They subsequently declared a revocation and demanded that the insurance sum be paid out to the estate.
Legal nature of beneficiary designation and transfer of the insurance benefit
Beneficiary rights in a life insurance contract
Designating a beneficiary in a life insurance contract for the event of death has very different consequences with respect to property law: An irrevocably designated beneficiary acquires an independent claim to the benefit upon the occurrence of the insured event; a revocable beneficiary right, however, can be changed or revoked by the insured person during their lifetime.
In the specific case, the right to benefits in the event of death had been set, but was structured as revocable. Before her illness, the decedent had not effectively transferred the claims; instead, she only tried to arrange this shortly before death with a new document.
Gift inter vivos – formal requirements and acceptance
A gift inter vivos generally requires notarial certification in accordance with § 518 (1) BGB, or—if this is lacking—actual execution (so-called handover gift). However, the deceased had not provided notarial certification. According to the court, attempting to change the beneficiary designation in favor of the recipient did not constitute a valid gift, as long as the benefit had not yet been paid out to that person. The gift contract thus remained provisionally ineffective.
Significance of the heirs’ right of revocation
After the death of the policyholder, the heirs as legal successors could revoke the proposed gift. The court emphasized that an attempted gift, where the promised benefit had not yet been executed and the formal contract was lacking, became invalid through the revocation by the heirs. The heirs opposed the application made by the intended recipient—with the result that the benefit fell to the estate and could not be paid out to the designated person.
Civil law classification and distinction
Difference between beneficiary right and claim transfer
The judgment particularly emphasizes the distinction between a contractual beneficiary designation and the transfer of the pay-out claim. A change of beneficiary is permissible exclusively according to the rules of the insurance contract, whereas transferring a claim, for example via assignment or gift, requires separate civil law prerequisites.
Significance for estate planning and contract drafting
Especially in the area of estate planning, the judgment is highly significant: it illustrates how important careful and early structuring of beneficiary designations is, as well as observing formal requirements when transferring claims to life insurance benefits, in order to minimize future disputes—especially those involving competing heirs.
Practical implications
The judgment of the District Court of Frankenthal provides clarity regarding the rights and obligations of heirs, beneficiaries, and policyholders. It makes clear that changes or transfers of death benefits from a life insurance policy after death are subject to strict civil law regulations, and in particular, gift attempts that do not meet formal requirements remain revocable by the heirs. Policyholders should therefore pay special attention, during their lifetime, to a clear and legally secure regulation of beneficiary rights.
Note on ongoing proceedings and further developments
This is a first-instance judgment. The final legal situation may still change as a result of an appeal or a decision by the highest court. The ruling should be interpreted especially in light of the case law of the Federal Court of Justice.
Source reference
Urteil des Landgerichts Frankenthal (8 O 282/21) vom 14.11.2022, berichtet u. a. unter: https://urteile.news/LG-Frankenthal-Pfalz__Verschenken-von-Todesfall-Leistung-aus-Lebensversicherung-scheitert-am-Widerruf-der-Erben~N32412.
Should you have any questions regarding the structuring of beneficiary rights in life insurance policies, estate planning, or the enforcement and defense of claims in connection with contractual insurance benefits and gift transactions, the lawyers at MTR Legal are available with comprehensive experience and an international perspective.
