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New York Life Insurance Co. v. Estate of Powell

United States District Court, W.D. Washington, Tacoma

May 14, 2014



RONALD B. LEIGHTON, District Judge.

THIS MATTER is before the Court on Charles Cox's motion for disbursement of funds (Dkt. #139) and the Powells' competing motion for disbursement of funds (Dkt. #143). The facts are well-known, mostly undisputed, and have been discussed at length in prior orders. Susan Powell went missing in December of 2009. Joshua moved to Washington in the aftermath of Susan's disappearance. In February of 2012, Joshua killed himself and the couple's two sons. This case is the fight over life insurance proceeds for policies covering Susan, Joshua, and the two boys' lives.

The Court has resolved most of the legal issues in prior orders. The only remaining issues are whether Washington's slayer statutes invalidate Joshua's beneficiary designations for the rider on his boys, and whether there are grounds to create a constructive trust for Susan's benefit.[1] Those issues can be decided on the record. Once those issues are resolved, there is no reason to further delay disbursing all of the insurance proceeds in accordance with the Court's orders.


Because the facts of this case have been thoroughly discussed in prior orders, only the facts central to the remaining issues and distribution will be discussed here. In 2009, Joshua and Susan Powell were married and living with their two sons in Utah. Susan went missing on December 6, 2009, under suspicious circumstances. Nobody has heard from her since, and her body has never been found. Joshua was the police's primary suspect, but he was never charged with a crime.

Two weeks after Susan went missing and in the midst of the investigation into her disappearance, Joshua moved to Washington with his sons. Joshua and Susan's parents, the Coxes, then engaged in a battle for custody of the boys. On February 5, 2012, Joshua tragically killed himself and his sons during what was supposed to be a supervised visit.

Three life insurance policies are now at issue. The first is a $500, 000 Beneficial Life policy insuring Joshua's life.[2] Joshua listed Susan as the primary beneficiary and the couple's revocable trust as the secondary beneficiary. He did not change those beneficiary designations after Susan went missing. The second policy is a $1, 000, 000 New York Life policy insuring Susan's life.[3] She listed Joshua as the primary beneficiary and the Trust as the secondary beneficiary.

The last policy is a $1, 000, 000 New York Life policy insuring Joshua's life.[4] That policy also has two $250, 000 riders attached, each insuring one boy's life. When Susan went missing, she was the primary beneficiary of Josh's policy, and the Trust was his secondary beneficiary. Josh and Susan were co-primary beneficiaries for the boys' riders in equal shares, and the Trust was the secondary beneficiary. But after Susan went missing, Josh made a number of beneficiary changes. In the final changes, Josh listed three of his siblings as co-primary beneficiaries of the New York policy insuring his life, but not in equal shares. Michael Powell was to get 93%, Alina Powell was to get 4%, and John Powell was to get 3%. For the boys' riders, Joshua listed himself as the primary beneficiary and Michael Powell as the secondary beneficiary.

In prior orders, the Court has ruled that Susan did not consent to Joshua's beneficiary changes (Dkt. 90); that Josh's New York Life policy was community property (Dkt. 90); and that Susan is presumed to be alive until December 6, 2014 (Dkt. 138). Although the presumption that Susan is alive can be rebutted, nobody has affirmatively stated an intention to do so. To date, no evidence has been presented to the Court by any party that identifies or establishes a triable issue regarding the fact or date of Susan's death. Accordingly, on March 25, 2014, the parties were ordered to inform the Court whether they intended to pursue an evidentiary hearing or trial to prove that Susan died at any time other than December 6, 2014. Cox responded that he did not. The Powells said that they wanted to "keep their options open on this issue" pending the outcome of a dispute in Utah State court over the Trust.[5]

While the Powells may want to keep their options open indefinitely while they posture in Utah State court, this Court has a live case and controversy that is ripe for consideration. The parties have been given ample opportunity to pursue the issue in this Court. Although presuming that Susan is alive may ultimately be a legal fiction, it is a legal fiction that was purposely and intentionally created for situations just like this. Accordingly, Susan is presumed to be alive and the insurance proceeds will be distributed accordingly.


Of the three policies, only Joshua's New York Life policy (and its two riders) is still in dispute. The Court has already determined that that policy is community property. Cox now contends that Washington's slayer statute prohibits any of Joshua's elected beneficiaries from receiving any of the rider proceeds. Cox also argues that the proceeds from Joshua's one-half interest in the policy should be placed in a constructive trust for Susan because Joshua allegedly caused her disappearance.

1. The Washington Slayer Statutes Do Not Invalidate Joshua's Beneficiary Designations for His One-Half Interest in the Riders on his Boys

Cox contends that Joshua would impermissibly benefit from killing his sons if any of his designated beneficiaries receive any of the rider proceeds. Cox argues that Washington's slayer statutes prohibit Joshua not only from personally receiving money his sons' life insurance money, they also prohibit him from controlling who receives that money. The Powells contend that while the slayer statutes would have precluded Joshua from personally receiving the proceeds, the ...

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