Peterson Claims He's Entitled To Insurance Payout

DURHAM, N.C. — Mike Peterson, fighting to prove he didn't kill his wife, is also in court fighting to prove he should be the beneficiary of her $1.4 million life insurance policy.

Peterson is scheduled to go on trial in May for murder in the death of his wife, Kathleen, who was found dead at the bottom of a staircase in their Durham home last December.

A successful novelist, one-time candidate for mayor and former newspaper columnist, Peterson has said his wife fell down the stairs. Police and prosecutors say deep gashes to Kathleen Peterson's head indicate she was killed.

Last month, Caitlin Atwater, Mrs. Peterson's only child and a one-time advocate for Mike Peterson's innocence, filed a wrongful death lawsuit against her stepfather in Durham Superior Court. She also made a claim to her late mother's insurance policy in federal court in Greenville.

In April, Prudential Insurance asked a federal judge to decide who should be paid the proceeds, which include $145,000 for basic life benefits, $580,000 optional life benefits and $725,000 for accidental death.

The insurance company said in court papers that it couldn't decide who should get the money because of "adverse and conflicting or potentially adverse and conflicting claims."

Court records show that on June 8, 1987, Mrs. Peterson made Frederick M. Atwater, her husband at the time, the beneficiary of the insurance policy she held as an employee of Nortel Networks, court documents show. The two divorced in November of 1991.

On July 29, 1997, Mrs. Peterson made her new husband, Mike Peterson, the beneficiary. But she never signed the form, court records show. Nortel date-stamped the unsigned form as being "entered."

Because there is no signature on the form, Frederick and Caitlin Atwater have said in court documents that all of the money should go to them.

"Prior to her death, decedent designated Defendant Frederick M. Atwater as the beneficiary of the life and accidental death benefits ... and made no valid change in the beneficiary designation prior to her death on December 9, 2001," Frederick Atwater's attorney, David Rooks of Chapel Hill, said in court documents filed in June.

Frederick Atwater, who lives in Washington, N.C., declined comment on the dispute.

Caitlin Atwater's attorney filed documents in June contending that if Frederick Atwater is not made the beneficiary, she should be the sole beneficiary because of North Carolina's "slayer statute," which prohibits economic gain for a person convicted of killing another.

Mike Peterson's attorneys countered in July that, because the 1997 form designating him as beneficiary was stamped by Nortel, it is clear he should get the money.

Mike Peterson said Frederick Atwater's claim to the insurance policy ended with his marriage to Kathleen Peterson.

"Kathleen made her feelings very clear when she divorced him," Peterson said.

Kathleen Peterson took out two insurance policies to comply with the terms of her divorce agreement with her ex-husband, Mike Peterson said. After Caitlin Atwater turned 18 and decided to attend Cornell University, she cashed them in and invested the money, he said.

Because of the continuing criminal trial, Mike Peterson's attorneys asked U.S. District Judge Malcolm Howard to keep the proceedings confidential. Howard refused that request in June.