Bro died w/o a will - left a 40K life insur policy

What is the name of your state (only U.S. law)? Michigan

My brother died w/o a will and had a 40K life insurance policy, no beneficiary named. Has a daughter through live-in girlfriend who is dead also. The dau is 35 y.o. and diagnozed "schizo - bipolar". Everyone is concerned that she won't be able to handle the money.

We gave her the life insurance papers to complete and send into the insurance company w/ her birth certif.

What happens from this point? We are very concerned with her having that money and not being mentally stable. She also receives his $3000 401K.

Unless the insurance contract contained provisions that would make the daughter eligible to receive the proceeds if there is no named beneficiary, I am not certain that the insurance company will pay her the proceeds. Have you read the contract or contacted the insurance company?

It could be that someone will need to open probate or possibly use a small estate process. (I don't recall offhand what Michigan considers to be a small estate and the process there.)

Unless the daughter is adjudged to be legally incompetent and a guardian/conservator appointed, I don't believe that there is anything that you can do.