Court asked to decide on Powells' insurance money

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PUYALLUP, Wash. — The latest legal battle involving Josh Powell apparently will be fought over who should get the money from Josh and Susan Powell's life insurance policies.

On Dec. 3, 2011, Josh Powell changed the beneficiary designation on his primary insurance, removing Susan Powell as the primary beneficiary and replacing her with his brother and sister, Michael Craig Powell and Alina Dawn Powell, according to documents filed in U.S. District Court in Tacoma.

On Feb. 14 — nine days after Josh Powell killed himself and his two young sons after setting fire to his house, and one day before controversy erupted over where Josh Powell's body would be buried — Michael and Alina Powell contacted New York Life Insurance about collecting on the policies for Josh and their nephews worth an estimated $1.5 million to $2 million.

But in a complaint filed in federal court in Washington on March 2, New York Life Insurance Co. questioned whether they should pay the beneficiaries designated by Josh Powell.

"If Joshua Powell is considered a slayer … he is clearly not entitled to the proceeds of either the children's riders or Susan Powell's insurance policy," the company said in court documents. "Given the timing and number of beneficiary changes Joshua Powell made (to his policy) after Susan Powell's disappearance and shortly before his apparent suicide and murder of his sons, New York Life also has concerns regarding Joshua Powell's competency at the time the beneficiary changes were made."

Josh Powell also had two additional life insurance policies through Beneficial Life.

Josh Powell's estranged sister, Jennifer Graves, said there are two $500,000 policies in the names of Josh and Susan Powell. And the beneficiaries ultimately were supposed to be their boys, Charlie and Braden Powell.

An attorney for Chuck and Judy Cox, Susan Powell's parents, said all the life insurance policies and the recent changes raise questions in her mind about whether the killings last month had been planned for some time.

"It certainly looks like it could be premeditated and this will be interesting to see in the policies whether there's a suicide exclusion because apparently there isn't," Anne Bremner said Wednesday. "The fact is, he (Josh Powell) had a lot of insurance on those boys."

Beneficial Life could not comment on its Powell insurance policies because of federal privacy laws.

Judy Cox said Wednesday she didn't know enough yet about what was going on with the insurance policies to make a comment.

"We're leaving it up to the attorneys to check out everything," Cox said. "We don't know what to think and don't know what to say yet because we really don't know what's going on."

New York Life filed its complaint in "interpleader," a legal term used when there are competing beneficiaries, because the company does not know who is legally entitled to the Powells' life insurance funds.

Because of that, many members of the Powell and Cox families have been listed in court documents as defendants-in-interpleader until the court figures out who rightfully is entitled to the money.

The company released a statement Wednesday saying, "Our hearts go out to the family of the victims of this tragedy. New York Life issued life insurance on members of the Powell family, and we are working with the court to make certain the proceeds reach the right parties."

Josh Powell has been a person of interest or suspect in Susan Powell's disappearance since she went missing in December 2009.

On June 28, 2007, Josh Powell took out a New York Life Insurance policy on his wife worth an estimated $1 million and $250,000 each for his two sons, Charlie and Braden.

On Dec. 3, 2011, Powell changed the beneficiary designation on the primary insurance portion of his policy to make his brother, Michael, the primary beneficiary and the person getting the lion's share of the money, followed by his sister, Alina, and other brother, John. The secondary beneficiary became his father, Steven Powell.

Josh Powell's life insurance policy has raised many questions for New York Life. For instance, because Washington is a "community property state," court documents indicate that "Joshua Powell was prohibited under Washington law from giving those proceeds away without Susan Powell's express or implied consent."

Susan Powell remains the sole trustee of the Powell trust.

The insurance company, in court papers, questions whether giving the money to Josh Powell's siblings would result in civil action.

"New York Life should not be required to determine these and other questionable issues of law and fact," the company's attorneys told the court.

A summons for the company's civil suit was issued Monday for Michael Powell.

Contributing: Andrew Adams

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