When an annuity becomes entangled in a homicide investigation, the payout process can become complex and lengthy. Legal complications, such as the “slayer rule,” may delay payments and complicate beneficiary rights. Understanding these scenarios is crucial for anyone involved in annuity contracts.
Money and murder seem to intersect more often than we might think. Take, for example, the mysterious death of Italian banker Roberto Calvi, who earned the nickname “God’s Banker.” In 1982, he was found hanging from Blackfriars Bridge in London, his pockets stuffed with bricks, sparking suspicions of foul play.
Then there’s the chilling case of Wall Street financier Ted Ammon, who was brutally bludgeoned to death in his Hamptons home in 2001 by his wife’s lover. This was not the first time financial elites found themselves at the center of violent intrigue. In 1920, the infamous “Morgan” bombings on Wall Street killed 38 people. Among the survivors was Joseph Kennedy, the influential financier and father of future U.S. President John F. Kennedy, who narrowly escaped the blast.
While stocks and bank accounts are often tied to such deaths, what is rarely discussed is the real link between annuities and murder. Unfortunately, that link rises more than people might think.
Exhibit “A” is Linda Watts, a 72-year-old Oklahoma woman suffering from dementia who died from self-inflicted gunshot wounds from a gun that her daughter, Jaye Dee Watts, had provided. Local law enforcement wound up charging the younger Watts with first-degree murder while in the commission of a crime, second-degree murder, kidnapping and aiding suicide by furnishing a weapon.
At stake was a $400,000 variable annuity opened by Linda Watts in February, 2022 with Brighthouse Financial, with Jaye Dee Watts listed as the primary beneficiary. With prosecutors charging the younger Watts with aiding in her mother’s death, Brighthouse took the issue to court to delay payment and to ask the court to name the proper beneficiary.
How a Murder Investigation Affects Annuity Payouts
So what happens when an annuity gets tied up in a murder case? While the outcome depends largely on the unique features tied to each case, some commonalities exist that annuitants may want to know.
“When an annuity becomes entangled in a murder investigation, it can lead to a significant legal situation,” says André Disselkamp, co-founder of Insurancy, an insure-tech services firm.
In this scenario, the usual process is that when the annuitant passes away, the assigned beneficiary is supposed to receive the payout. “However, during a murder inquiry, the insurer might hold off on making payments until the legal proceedings are finalized,” Disselkamp notes. “This could involve looking into whether or not the beneficiaries are implicated.”
If so, the slayer rule may be applied to prevent any payout in case of guilt. The slayer rule is a legal principle that prevents a murderer from inheriting from their victim’s estate, effectively treating the killer as if they had predeceased the victim.
“These inquiries can result in delays, in payments stretching from months to years,” he adds. “Actually, in murder cases, most annuity claims are held up while almost half of beneficiaries are not prepared for these delays, industry data shows.”
Insurance Industry Protocols
While murders are thankfully rare, the insurance industry does have a set of protocols tied to homicides (and suicides). Here’s a snapshot, compiled with the help of Andrew Pickett, a trial attorney and founder at Andrew Pickett Law, PLLC in Melbourne, Florida.
- Typical Outcome: When an annuitant dies, the designated heir is entitled to the annuity assets. “However, the process is only sometimes straightforward and can depend on the terms outlined in the annuity contract,” Pickett says.
- Impact of Murder Investigation: A murder charge or investigation usually complicates the payout process. “Insurance companies tend to delay settlement until the inquiry concludes to ensure that all legal ramifications are addressed,” he notes. “Preparing for a waiting period in such scenarios is prudent.”
- Implications of Suicide: In situations involving suicide, the payout terms can vary significantly, depending on policy clauses. “Often, the existence of a ‘suicide clause’ might affect the payout to the heirs, with potential delays until legal matters are undoubtedly resolved,” Pickett adds.
- Structuring Annuities: Insurers typically exercise caution when structuring an annuity to account for potential issues like murder or suicide. “Such provisions are not commonly found in standard contracts, largely due to the legal and ethical complexities involved,” he notes.
The Type of Annuity Matters
When any annuitant passes, the type of annuity in play may dictate what happens with any payout.
“A deferred annuity contract owner, who owns and controls the contract, can name one or more beneficiaries to receive proceeds from the annuity upon the owner’s death,” says Jeffrey K. Dellinger, Longevity Risk Management Corporation in Fort Wayne, Indiana. “The value is typically the full account value, as surrender charges tend to be waived on death.”
When the owner-annuitant of an immediate annuity passes away, the type of annuity payout option they selected will determine what happens next, according to Dellinger. “For example, with a single ‘life only’ annuity with no joint annuitant, no additional guarantees and no refund features, the periodic (generally monthly) annuity payouts cease, and nothing further happens.”
Past that, the insurance company issuing the annuity will delay payment in the event of a murder or suicide if there’s any uncertainty as to whom payment is legally due.
“In some instances, the insurance company agrees that it owes annuity death benefit proceeds but there exists uncertainty as to who is legally entitled to them; i.e., there may be rival claims to insurance proceeds,” Dellinger says. “This presents the risk of double liability to the insurer. The insurer may pay one claimant, and the other may receive a judgment against the insurer in court. Or two or more claimants may each obtain such judgments in different courts.”
In this scenario, the insurance company can encourage the multiple claimants to effect a compromise settlement, but the claimants may be unwilling to do so.
“Here, the insurance company has a remedy in this situation called ‘interpleader’,” Dellinger notes. “Interpleader involves the payment by the insurance company (and interest thereon) to the court. The claimants are required to litigate their legal rights to the proceeds, and the insurance company’s obligation is considered fully discharged.”
Interpleader subjects claimants to delays and legal expenses “that might have been avoided had they agreed to a compromise settlement,” he adds.
What Beneficiaries Should Do
It’s rare, if it happens at all, for an insurance company to design an annuity to account for murder or suicide, as those events are hard to predict and plan for in a contractually binding way. But if you ever find yourself stuck between a murder, suicide or an annuity, heed these steps.
Be Prepared for an Inquiry
When someone dies by murder or suicide, there is typically no interruption in receiving the benefits. “That is, unless the insurance policy includes a clause regarding suicide that may have a time limit before regular payments resume,” Disselkamp says. “Additionally, following suspicions of foul play may prompt insurance companies to conduct a more thorough inquiry.”
Always Have Your Paperwork in Order
Be prepared if a murder or suicide case arises, as unimaginable as that seems. “Families must ensure they have all the necessary paperwork in order and should consult with a legal professional as well as reaching out to the insurance company promptly,” Disselkamp says. “The better prepared, the easier it will be to navigate a difficult situation despite its complexities.”
Talk to a Lawyer and an Annuity Expert
Dellinger says there is “no way” to structure an annuity to factor in a murder or a suicide.
“Unlike life insurance, there is little or nothing to be gained financially from the death of an annuity contract owner,” he says. “The named beneficiary receives the proceeds upon a death not involving criminal activity. The insurance company will typically pay the full account value, waiving surrender charges.”
There are ways to structure an annuity so that death benefit proceeds are not immediately squandered by a beneficiary unable to handle them due to youth or mental infirmity properly. “In such structures, a responsible individual (e.g., trustee) may dole out the death benefit proceeds according to the written wishes of the decedent owner,” Dellinger says.
That’s where good professional advice helps.
“The family/heirs can always obtain trusted legal counsel for advice,” Dellinger says. “If the recipient of the annuity proceeds is not involved in the murder in any fashion, proceeds can be distributed just like any other cause of death of the contract owner.”
Editor Norah Layne contributed to this article.