Deceased Beneficiary

[DMT642]

What is the name of your state? GA


Please share comments.

My uncle passed away recently. He was a retired employee that had life insurance through is employer. My mother was listed as the sole beneficiary on this policy. However, she predeceased him by several years. Yet, he did not change her as his beneficiary. At his death, I possessed no documentation regarding this matter, so it has been difficult trying to get information from the company that held ownership (I assume) of the policy on his life. I found out through other family members that his stepdaughter was alloted the death benefit amount of a few thousand dollars. An amount that is much less than the original face value of the life insurance policy on his life. You see, the company that my uncle retired from has undergone a merger & acquisition process (twice) and one of the companies (the one that acquired my uncle's company through merger and acquistion first) did some sort of "life settlement type thing" in that the original policy was sold to another company. Thereby reducing the face value of the policy subnificantly. IS THIS LEGAL AND CAN THIS COMPANY SIMPLY BYPASS & DISMISS ME AS BENEFICIARY TO THIS POLICY SINCE I AM THE EXECUTOR AND SOLE HEIR OF MY MOTHER'S ESTATE.

Lastly, a representative of the company that currently owns the original company (my uncle's employer) told me that basically they have nothing to do with things since they too were sold away during the second merger & acquistion process. But that, she was sure that funds could not be issued to the deceased beneficiary. Incidently, I also found that it took "company attorney involvement" to allow for approval that the stepdaughter should receive the funds to arrange for funeral services for him. This is puzzling to me and I can only assume that she must have presented them with info which brought them believe that she is his next-of-kin. She is not. My uncle was the father of one adult son. This stepdaughter however, handled business such as his social security checks and may have presented documention provided her by the SSA in order to confirm her relationship status to him.

Thanks for the availibility of this forum.

 

[somarco]

The situation you describe makes it APPEAR this is an individual policy, not a group life plan. Working on that assumption, my response is such.

Ownership of the policy could rest with the employer if this were a split dollar policy or a policy used to fund a deferred comp plan. Once the company is sold the new employer is not obligated to continue the coverage. Any agreement between your uncle's employer and him would dictate the future of continuing the policy or not. In the case of deferred comp or split dollar, there is a separate agreement outlining who owns what portions of the policy and how future distributions are handled.

You need more documentation, in particular the employer/employee agreement, before you can get to the bottom of this situation.

It appears you were not a named beneficiary, and absent a will or other document naming you as a party in interest, the funds would be distributed to a direct heir. According to your post, that heir would be his son. In some situations it is also possible the stepdaughter could also be entitled to funds.

The life settlement was probably a reduced, paid up plan or extended term insurance. Either one of these settlements could have reduced the face amount.

From your post it appears you have no rights to the proceeds and would be served just to drop the issue.

 

[DMT642]

Hi Somarco,

Your last 2 statements are confusing. What exactly, do you mean? No it's not legal; to dismiss me as heir or no I have no claim at all on this group policy which lists my mom as his only beneficiary?

 

[somarco]

You are not a named beneficiary to the policy.

Your mother was the named beneficiary, but according to your post, she pre-deceased your uncle. The policy (apparently) did not name a new or successor beneficiary so the proceeds would then be payable to the estate of your uncle and distributed according to a will or the intestacy laws.

Your mothers rights (as beneficiary) expired at her death. There is no reason for the carrier to pay those proceeds to her estate. She has no claim to the proceeds, neither do you.

 

[ALawyer]

Many small policies have a "facility of payment" provision. Such provisions are designed to prevent the company from keeping the money and to avoid the need for a company to demand of a rightful likely beneficiary "proof" that would require family members to go through expensive and/or complicated court proceedings to collect a small sum, or for the company to delay and hassle family members. Sometimes they work an injustice, but on the whole, they make more sense than harm.

These provisions -- which you should carefully review -- vary from policy to policy and often authorize an insurance company to pay the funds to a person that appears to be an heir, family member or beneficiary without absolute proof. As the son of a deceased beneficiary you are out of luck -- your mother's right to the proceeds would have died with her unless the proceeds would have gone to his estate and she was entitled to a share of the estate. There does not seem to be enough involved to fuss with, and lawyers fees would likely eat it all up.. The rightful heir may have rights against the person paid, but that's for him, not you.