Re: Life insurance policy that has no beneficiary listed

[duckquest]

Re: Life insurance policy that has no beneficiary listed

ohio
A devorced friend died and had three grown children. He had an insurance policy from work that originally listed his daughter as the beneficiary. His company changed insurance companies and a new beneficiary card should have been filled out. For some reason he neglected to re-submit a beneficiary card. The insurance company says their policy is to pay a policy that does not list a beneficiary to a spouse first and if there is no spouse it will go to the children. His brother is the executor of the estate and is out to get his percentage of this in the estate. He says this money has to go to the estate account and be divided up including him with a percentage. Is this legal? Can he cheat my friends children out of part of this insurance money?


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Concerned Friend


08-27-2001 01:58 AM



I AM ALWAYS LIABLE
Senior Member

Registered: Jan 2000
Location: Los Angeles, California
Posts: 10971
My response:

The brother is absolutely wrong. While the money automatically goes to the Estate, the whole amount gets divided ("per stirpes" **) among the deceased's children. The brother, if appointed as the executor of the Estate, only gets his "statutory" fees for being the executor or representative of the Estate, no matter how large the Estate might be. The brother doesn't get a percentage or "a cut of the action". Statutory fees; that's all he gets (assuming that he's not named as an Heir in the brother's Will).

But, what are you going to do ? There's nothing you can do as an "outsider".

IAAL

** PER STIRPES - Prounounced "Per Stir Peeze" Lat. Term used to designate a system of inheritance under which children take among them the share which their parent would have taken had he survived the decedent. Thus the children are said to claim their shares by representing their parent.


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Last edited by I AM ALWAYS LIABLE on 08-27-2001 at 02:19 AM

08-27-2001 02:15 AM



duckquest
Junior Member

Registered: Aug 2001
Location: Ohio
Posts: 6
ohio
His daughter has talked to me extensively about this and seems confused as to what she should do. I had suggested that what he's doing is not legally correct and that the three children should get their own lawyer to look after their best interests. They don't have much money and were not sure if they went to a lawyer about this if it would be a waste of their time and money. I will still incourage them to get a lawyer to keep the "brother executor" in line. I don't feel that the lawyer handling the estate is handling this correctly because he should put this lame idea to rest. I sometimes think he's working for the executor not the estate. Can this be the case?


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Concerned Friend

Last edited by duckquest on 08-27-2001 at 10:31 PM

08-27-2001 02:53 AM



duckquest
Junior Member

Registered: Aug 2001
Location: Ohio
Posts: 6
Also I forgot to mention he is listed in the will to receive 20% of the estate, that is why he wants the money.

 

[ALawyer]

Many GROUP insurance policies have a "facility of payment" clause --particularly on small policies of less than $10,000 -- that enables the insurance company to pay the heirs at law directly and thus avoid the need for the estate to have to be probated. It all depends on exactly what the policy says. In most cases if there is no beneficiary named the proceeds are payable to the estate. With the facility of payment provision if no estate has been opened within a period the company may pay the spouse, if any, or the children, depending on how the clause is written.

Here the brother is NOT cheating the kids out of "their" money. You say the Will says he gets 20% of the estate, which is the clearest evidence of what brother wanted him to have. And for most people, the insurance proceeds and together with the 401k/IRA -- which also pass by beneficiary designation -- is the major financial asset (and apart from a home usually the largest) Pehaps the deceased didn't "neglect" to file a beneficiary designation, but made that an explicit choice. Also, if the old designation named only 1 daughter and it was in force, then that one daughter would have gotten everything, which is unfair to the other 2 kids.