by erinnrobert4ever » Wed Jan 07, 2015 04:49 am
My mother-in-law passed away on Saturday and my husband contacted the life insurance company to let them know. We received the paper work from the company and to our surprise one of his sisters is listed as a beneficiary, however, she was arrested for stealing from my mother-in-law and was prosecuted for it as well. It states in her Will that she is not to receive anything. Can and should we contest the life insurance beneficiary?
Posted: Wed Jan 07, 2015 10:10 pm Post Subject:
You can contest anything you want. But understand this: the will of your mother-in-law has absolutely no effect on the life insurance proceeds. Life insurance is a "non-probate" asset. A will only governs "probatable" assets. The last known beneficiary statement filed with the insurance company controls the distribution of the death benefit.
By contesting the claim, you will force the insurance company to file a "Complaint in Interpleader" in federal court. They will keep about $5000 - $6000 out of the death benefit proceeds for their trouble. You -- and every other beneficiary -- will each have to hire a federal bar-qualified attorney to represent you, and that will cost upwards of 30% - 40% of whatever portion of the death benefit your husband receives (assuming he is even a beneficiary). If there are three beneficiaries, for example, and we're arguing over a $50,000 policy, each of the beneficiaries would end up with about $10,000 after all is said and done.
While the will might be evidence of your mother-in-law's intent, it will serve no purpose in court in an interpleader action, which simply determines whether a person has a beneficial interest in the proceeds.
If there is not a whole lot of money involved, you might be better off not contesting the claim. Using the $50,000 example above, each of the three beneficiaries would receive about $16,666.67. Is $6600 worth the trouble of having to wait 6-12 months to put this matter behind yourselves? Because no one gets paid until the interpleader action is final.
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