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Intent Alone Is Not Sufficient To Change Insurance Beneficiary, Says North Carolina Appellate Court

Blogs, Life Insurance

In Genworth Life and Annuity Ins. Co. v. Abernathy, No. COA10-242, 2011 WL 1467659 (N.C. Ct. App. Apr. 19, 2011), one of the questions before the North Carolina Court of Appeals concerned the whether there was sufficient evidence that an insured had changed the beneficiary of his life insurance policy.

The insured’s daughter, Lisa Marie Abernathy, argued that there was. The lower court, however, ruled that there was not sufficient evidence to create a material question of fact, and therefore granted summary judgment to Genworth and to the father’s ex-wife. 

As the appeals court said, “Ms. Abernathy claimed that her father, in the summer of 1999, executed and submitted to Genworth a change of beneficiary form making her the sole beneficiary of his life insurance policy.” This, according to Ms. Abernathy, changed the beneficiary to her from the insured’s ex-wife, Joy Lynette Biddy. But the evidence, said the appellate court, was that Genworth had no record of any change of beneficiary form being received from Mr. Abernathy in 1999. 

Ms. Abernathy relied, however, on the argument that the evidence showed a question of fact as to substantial compliance with the change of beneficiary procedures. The appellate court explained that substantial compliance means that “[I]f the insured has done substantially what is required of him, or what he is able to do, to effect a change of beneficiary, and all that remains to be done are ministerial acts of the association, the change will take effect, though the formal details are not completed before the death of the insured.” The court also said that “some affirmative act on the part of the insured to change the beneficiary is required, as his mere unexecuted intention will not suffice to work such a change.”

The appeals court rejected the idea that there was evidence that Ms. Abernathy saw her father sign a change of beneficiary form, since the record on appeal did not include such evidence. The court also said that the evidence that her father intended to change the beneficiary was insufficient to show that he did take some act to change the beneficiary:

Ms. Abernathy . . . points to her deposition testimony that her father met with his stockbroker to review paperwork one week before he passed away. She testified as to the purpose of this meeting: “Daddy wanted to make sure that I was supposed to be the sole beneficiary. And he wanted to make sure everything was in order for that for when he passed.” While we agree with the trial court that this testimony is barred by the Dead Man’s Statute, seeN.C.R. Evid. 601(c), it would, even if admissible, be insufficient to defeat summary judgment. At most, this testimony supports a finding that Mr. Abernathy intended for Ms. Abernathy to be the beneficiary of the policy. . . . [H]owever, . . . an insured’s “‘mere unexecuted intention will not suffice to work such a change.'”

Ms. Abernathy cites no authority suggesting that evidence of an intent to change a beneficiary would be sufficient to establish substantial compliance. . . . In addition, this testimony cannot establish the additional requirement that Mr. Abernathy “substantially fulfill[ed] the actions required on his part to accomplish the change” under the policy and that he “communicate[d] these efforts to an agent of the insurer.”

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Finally, even if Ms. Abernathy did have evidence that her father signed the change of beneficiary form, she has failed to present evidence that it was delivered to Genworth. She cites her testimony that her father sent it to Genworth, but there is no indication that she had personal knowledge of that mailing. If that testimony is based on what her father told her, then it is barred by Rule 601(c), the Dead Man’s Statute. With respect to it being received by Genworth or its agent and being mishandled and not processed, Ms. Abernathy cites only to her counterclaim. As this Court has previously held, “‘a defendant’s unverified pleadings are insufficient to defeat a motion for summary judgment since they do not comply with the requirements of Rule 56(e).'”

The court concluded by pointing out that, in opposing a motion for summary judgment, Ms. Abernathy, at best, “presented evidence that her father intended or believed he had made her his beneficiary, although some of that evidence was inadmissible under the Dead Man’s Statute” but that “such evidence, even if admissible, does not . . . meet the requirements for substantial compliance sufficient to make her the beneficiary.”