by lkohli » Thu Jan 06, 2011 05:55 pm
My grandfather named my grandmother his benficiary to the insurance company. She passed away 6 months ago and he did not change the beneficiary info. He passed away last month leaving behind a will that names his only daughter as sole beneficiary. The insurance co. is turning the insurance over to the estate and the other step-children are fighting for it. Does his daughter have any way to get the insurance out of the estate?
Posted: Thu Jan 06, 2011 08:31 pm Post Subject:
In the event that there are no living beneficiaries at the time of the insured's death, state law prevails. In most states, if there are no beneficiaries alive when the insured dies, the death benefit will be paid to the estate of the insured.
As such, the death benefit will now be subject to the codicils and conditions as laid out in the will. Estate assets will be distributed according to the will directions and state law. As well, since the death benefit was paid directly to the insured's estate, it is subject to potential estate taxation (no federal estate taxes if he died in 2010) and state estate taxation. In addition, it will increase the cost of probating the estate.
This is why we ALWAYS want to see a named beneficiary.
Unfortunately, the death benefit is now going to be distributed according to the will and state law. A will cannot change the insurance contract and state law/rule. The insurer is required to adhere to law and rule, and since there was a life insurance policy in force, the conditions and rules within the policy govern the distribution of the death benefit. There are no ways around this.
InsTeacher 8)
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