Introduction
For most of our clients, the key financial attribute of life insurance is its death benefit. A life insurance contract’s ability to provide a substantial and liquid source of cash at the insured’s death can solve plenty of financial problems faced by the policy’s beneficiary.
The increase in a policy’s value at the insured’s death creates potential problems for insurance companies. Underwriters must deal with the idea that someone could be more valuable financially when dead than when alive. In fact, one of the complaints around the whole stranger-owned life insurance business is that it creates circumstances under which a person unrelated to the insured could be motivated to hasten an insured’s death.
Likewise, movies such as Double Indemnity have centered around the premise that a life policy beneficiary or estate heir could be financially motivated to murder. The idea for such movies is drawn right out of everyday life and newspaper headlines.
Nearly every state has decided that it would be unfair to let a beneficiary who caused the insured’s death profit from a life policy. They have implemented laws to prevent a person who causes an insured’s death from profiting as beneficiary of the insured’s insurance policy. Such laws are commonly referred to as slayer statutes.
Do people murder for financial gain in real life? Unfortunately, yes. The cases selected for this article have elements that could easily have made up a movie plot. The courts in these cases were either
- forced to decide how the state’s public policy to prevent unjust enrichment for a person who caused a death would be applied in specific situations or
- tasked with figuring out whether the financial reward associated with the insured’s death was a motive for murder.
Do these cases provide valuable lessons for prospective insureds and life insurance professionals? Read on and decide for yourself.
The Cases
Here two cases decided in recent years dealing with slayer statutes.
In re Donald F Clark Trust
In the Michigan case of In re Donald F Clark Trust, No. 366592 (Mich Ct App, 1/16, 2025), the court was called on to decide an interesting slayer statute issue. Even though the case did not deal directly with life insurance, its implications are connected to common slayer statute issues.
In 2017, Donald F. Clark created an irrevocable trust to provide for the benefit and welfare of himself and his wife, Elaine. The trust named family friend Michael Mooney as trustee.
Donald died later in 2017. The trust’s terms provided for Elaine’s needs during her lifetime with the remainder to go to Donald and Elaine’s son, Donald L. Clarke (Donnie) at Elaine’s death. If the son was not living at the time of Elaine’s death, any remainder was earmarked for Mooney.
Donnie died in 2021, and Elaine subsequently passed away in 2022. Mooney filed a petition with the Michigan probate court asking it to terminate the trust and distribute assets to himself. Elaine’s niece, who had been acting as an advocate and POA agent for Elaine, objected.
Among other arguments, Elaine’s niece said Mooney had been indicted for soliciting the murder of Elaine and Donnie.
At the preliminary examination for Mooney’s separate criminal proceeding . . . Daniel Michael Blackhawk testified regarding two alleged phone conversations that he had with Mooney. Blackhawk claimed to be Clark’s illegitimate son and Blackhawk claimed that Clark had wanted Blackhawk to have an inheritance. Blackhawk testified that, in two phone conversations with Mooney, Mooney attempted to solicit Blackhawk’s help in killing Elaine and Donnie in exchange for helping Blackhawk obtain his inheritance. Blackhawk contacted police. The district court found that there was probable cause, and it bound Mooney over on two counts of solicitation of murder.
Elaine’s niece concluded that Michigan’s slayer statute (MCL 700.2803) should preclude Mooney from receiving any proceeds from the trust.
An individual who feloniously and intentionally kills or who is convicted of committing abuse, neglect, or exploitation with respect to the decedent forfeits all benefits under this article with respect to the decedent’s estate, including an intestate share, an elective share, an omitted spouse’s or child’s share, a homestead allowance, a family allowance, and exempt property. If the decedent died intestate, the decedent’s intestate estate passes as if the killer or felon disclaimed his or her intestate share.
Ultimately, there was no dispute that both Elaine and Donnie died from natural causes. The solicitation of murder charge against Mooney was ultimately dismissed because Blackhawk passed away.
The appeals court disposed of the argument that the slayer statute should apply by saying:
The language in (the slayer statute) is plain and unambiguous. Two actions trigger the statute’s application: (1) a felonious and intentional killing, or (2) a conviction of abuse, neglect, or exploitation of the decedent. It is undisputed that neither has occurred in the present case. . . . Therefore, the slayer statute does not apply.
As a result, Mooney remained the remainder beneficiary of the Clark trust.
Estates of Butwin
The Estates of Butwin, No. 1 CA–CV 15–0034, (AZ Div. 1, April 19, 2016) case does not directly involve life insurance either, but it considers some of the tricky issues involved when creditors have a claim against a killer’s estate.
Arizona resident James Butwin allegedly murdered his wife, Yafit, and their three children before taking his own life. The family tragedy raised several slayer statute issues that were ultimately sorted out by the state court of appeals.
Probate proceedings were initiated to administer Yafit’s estate and James’s estate, and the cases were consolidated.
After the Butwins’ deaths, two real estate LLCs discovered James Butwin had embezzled nearly one million dollars from them in his capacity as their property manager. They asserted claims against James’s estate and obtained judgments of $965,000 in total.
Yafit’s mother, Zrihan, filed a separate complaint for wrongful death against James’s estate. Zrihan was awarded damages of $1,090,000 in the wrongful death action. The assets in James’s estate were insufficient to satisfy both the LLCs’ and Zrihan’s judgments.
Zrihan filed a probate petition for a constructive trust on James’s estate. The proposed creation of a constructive trust was intended to give the wrongful death claim higher priority on James’s assets than the claims of the LLCs.
In her petition, Zrihan asserted that two provisions of Arizona law applied:
F. After all right to appeal has been exhausted, a judgment of conviction establishing criminal accountability for the felonious and intentional killing of the decedent conclusively establishes the convicted person as the decedent’s killer for purposes of this section. In the absence of a conviction, the court, on the petition of an interested person, shall determine whether, under the preponderance of evidence standard, the person would be found criminally accountable for the felonious and intentional killing of the decedent. If the court determines under that standard that the person would be found criminally accountable for the felonious and intentional killing of the decedent, the determination conclusively establishes that person as the decedent’s killer for purposes of this section. . . .
K. The decedent’s estate may petition the court to establish a constructive trust on the property or the estate of the killer, effective from the time of the killer’s act that caused the death, in order to secure the payment of all damages and judgments from conduct that, pursuant to subsection F of this section, resulted in criminal conviction of either spouse in which the other spouse or a child was the victim.
The probate court determined that the evidence was sufficient to conclude that James killed Yafit. However, it found that the requirements to create a constructive trust over James’s assets were not satisfied. Zrihan appealed that decision.
The state appeals court said:
The plain language of Subsection K contains a specific limitation to Subsection K’s application: the killer’s conduct must have “resulted in criminal conviction of either spouse in which the other spouse or a child was the victim.” . . . Thus, even if (Subsection F) does not require a criminal conviction, Subsection K expressly does. We cannot read Subsection F as controlling Subsection K without rendering the “criminal conviction” language superfluous.
As a result, the appeals court affirmed the probate court’s decision to deny Zrihan’s petition to create a constructive trust over the assets in James’s estate.
A Potential Problem with Stranger-Owned Life Insurance and Life Settlements
Stranger-owned life insurance (STOLI) has often been used as an investment technique.
Under its historical typical implementation, investors will encourage someone (usually an elderly person) to purchase life insurance. The investors will provide money to the insured to pay the premium.
After the policy has been in force, the investors will often have the insured transfer the policy to them. The investors, depending on circumstances, may plan to hold the policy until the insured’s death, or they may life settle the policy.
The insured is usually paid for participating in the transaction, which is what has traditionally motivated many to participate in STOLI arrangements.
STOLI undermines the primary purpose of life insurance. The investors at the policy’s inception, whether individuals or organized into a company, have no insurable interest in the life of the insured.
Life settlement companies typically offer to buy life insurance policies with older or medically impaired insureds—not just from those terminally ill. The life settlement market addresses a legitimate financial niche. Since the surrender value of a life contract doesn’t always reflect its fair market value, life settlements help close that gap. In that sense, life settlements are good for consumers.
However, once a policy has been sold to a life settlement company, the policyowner loses control over who owns the contract. Likewise, an insured has little or no say over who ultimately owns a STOLI insurance policy. The lack of insurable interest increases the risk of an unrelated person or entity profiting from the insured’s death.
This is not to imply that STOLI marketers or life settlement companies are likely to harm the insured. However, erasing a profit motive on the part of a policy’s beneficiary has been one reason for slayer statutes to exist.
The following murder cases illustrates situations where people sought to buy life insurance to profit from the death of an unsuspecting insured.
The Brandy Odom Murder Case
Cory Martin, who operated as a pimp, resided at a house in Rosedale, Queens, with the then-
26-year-old victim, Brandy Odom, and another woman named Adelle. Both Odom and Adelle were engaged in commercial sex work for Martin. In March and December 2017, Martin and Adelle fraudulently obtained two life insurance policies in Odom’s name.
In 2018, Martin strangled Odom in her bedroom. Martin and Adelle then purchased cleaning supplies and a vacuum to clean up the murder scene. Adelle subsequently testified that Martin used an electric saw to dismember the victim’s corpse in the bathtub after covering every surface in the bathroom with heavy-duty, black garbage bags to avoid leaving evidence of the killing.
The two subsequently discarded Odom’s body parts in a park.
After Odom’s murder, at Martin’s direction, Adelle made several unsuccessful attempts to claim benefits under Odom’s life insurance policies. The policies’ death benefits were $200,000.
After a two-week trial, a jury in Brooklyn found Martin, 36, guilty on all counts of an indictment charging him with murder for hire, murder-for-hire conspiracy, wire fraud conspiracy, aggravated identify theft, and fraudulent use of identification.
Karl Karlsen and the Serial Deaths
The court in Karlsen v. Kilpatrick, 17-CV-6386L (U.S.D.C. W.Dist.NY 5/14/2019) summarized the tragic facts surrounding the death of Levi Karlsen.
On November 3, 2008, [Karl Karlsen] obtained a $700,000 life insurance policy on his son Levi, naming himself as sole beneficiary. Levi was petitioner’s son by his first wife, Christine, who had died in a fire in California in 1991. Christine’s death had been ruled non-accidental, but prior to Levi’s murder in 2008, no one had been charged in connection with her death.
Seventeen days after [Karl] obtained that policy on Levi’s life, he and Levi (who was married and had two children) went before a notary public, who witnessed Levi sign a handwritten will that purported to leave Levi’s entire estate to (Karl) in the event of Levi’s death. Within hours after Levi signed that will, Levi was killed. Just prior to Levi’s death, he was in [Karl]’s garage, working on a truck. Levi was underneath the truck, which had been jacked up with a single jack under the front bumper. The front wheels of the truck had been removed. By his own admission at his later plea proceeding in state court, [Karl], knowing that the truck was unstable, jumped into the cab, which caused the truck to fall on Levi’s chest. Levi did not die immediately. Despite knowing that Levi was still alive, but pinned to the ground, [Karl] made no attempt to help him, but left the scene. He then went out for several hours with his then-wife, Cindy Karlsen [“Cindy”], who was not present during these events, and who was unaware that any of this had occurred. When [Karl] and Cindy returned home, Karlsen “discovered” Levi’s body in the garage, under the truck. Cindy called 911, and Levi was taken to a hospital, where he was pronounced dead. Initially, Levi’s death was deemed accidental, based in part on Karlsen’s statements to medical personnel, which indicated that when Karlsen left, Levi was alive and still working on the truck. Petitioner subsequently filed a claim under Levi’s life insurance policy, and collected $707,000.
Cindy began to suspect that Karl had killed Levi. She found out that Karl had invested part of the proceeds from the policy on Levi’s life in a new $1.2 million policy on Cindy.
When confronted, Karl admitted that he had killed Levi. He was subsequently indicted for murder and insurance fraud in New York. Karl ultimately pleaded guilty to one count of murder.
As a result of the facts surrounding the murder charge, authorities in California reopened an investigation surrounding the death of Karl’s first wife in 1991.
His first wife, 30-year-old Christina Karlsen, died in a fire while trapped in a bathroom behind a boarded-up window.
The fire itself was the result of a series of incredible coincidental accidents, Karlsen would soon tell investigators. The bathroom window was boarded up because Christina had accidentally broken it three days earlier, Karlsen told them, according to a report in the Syracuse Post-Standard. A jug of kerosene was in the hallway outside the bathroom, put there accidentally by Christina, who thought it was a jug of water, he claimed. The jug had been accidentally spilled onto the hallway carpet by a cat and dog, he told investigators.
And Karlsen had accidentally placed a defective electric light too close to the kerosene-soaked carpet, igniting the blaze.
Firefighters ruled the fire accidental.
Karlsen collected $200,000 in life insurance that he had taken out on Christina just 20 days before her death, according to a court document. He then moved to New York.
https://www.recordnet.com/story/news/courts/2020/02/09/ex-lode-man-who-killed/986409007
A California jury convicted Karl in 2020 of the first-degree murder by arson of his first wife Christina. He was sentenced to life in prison without the possibility of parole.
Conclusion
The cases discussed in this issue are a mere sampling. In three of the four, the murder triggering the court proceeding or criminal indictment was between spouses or other close family members. In the Odom murder case, the policies were purchased fraudulently by an unrelated person.
Where the emotional bond between the insured and the beneficiary is weak, the circumstances arguably increase the temptation for the beneficiary to pursue conduct that increases the possibility of a death claim.
The state slayer statutes attempt to prevent a killer from profiting financially from his or her crime. As laws and fact patterns differ from case to case, so results in slayer statute cases can also be hard to predict.
Likewise, where amounts of coverage are high, the possibility of foul play also increases. Underwriters and producers share some responsibility to make sure the insured understands the personal risks associated with disproportionately large amounts of coverage.
It’s hard to know whether any additional action by an insurance agent involved in the life insurance transactions would have prevented the tragic circumstances discussed. What lessons, then, should life insurance professionals take from these cases? We think there are two:
- Where a policy is going to be owned by a third party from its inception, make sure the insured is an active participant in the application process.
- Where the insured intends to transfer a policy she owns to a third party, point out the potential financial risks of doing so—even if the conversation feels uncomfortable.