What Happens To A Life Insurance Policy If There Is No Beneficiary??
Posted July 25, 2009 – 10:18 am in: structured settlements FAQSomeone has died, and had a life insurance policy but didn’t have anyone listed as a beneficiary. Before his death he did write a will of sorts saying that he wanted everything to be handled by his sister. So what happens to the life insurance, how does the sister find out where to go and what to do. Does she have to go get an Estate lawyer?? The insured also has a 17 year old daughter, so would it go to her since she is his daughter even though not listed as benificiary??
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If there is no beneficiary, the money will be go to the insured’s estate. From there, the money will have to be settled in court.
Usually in this instance the benefit is paid to the estate. It is then used to help settle the estate; any left over funds can be distributed to the next of kin, as stated in the decedent’s will (if there was one). The terms of a will does not compel an insurer to pay anyone in particular.
However — some older policies have a clause called “Facility of Payment.” Basically, this clause states that ANY family member or friend of the deceased may claim the money IF they can prove they incurred funeral expenses on behalf of the insured. So if this was an old policy, look through it to see if this provision is there.
If no beneficiary is named or no beneficiary survives the insured, the benefit will be paid to the estate.
If he had a will, she will likely need an attorney to open probate anyway. “A will of sorts” will likely not hold up in court in which case, he died intestate and his estate will go to his next of kin which would be the daughter most likely.
You can’t just take a handwritten will and assume that everything is the sisters. If the daughter comes back and files a lawsuit against her, she’s going to wind up in court anyway so get an attorney and do it right. Let the probate court divide it up so you don’t wind up with more legal problems.
If the insured does not designate a beneficiary (or all the beneficiaries have predeceased him/her) and the policy does not specify a beneficiary, the funds are payable to the decedent’s estate.
there is going to be a long court battle to claim the money in the estate.. so people better name a beneficiary or beneficiaries if they have life insurance
Well, it’s extremely unusual to have no named beneficiary – it’s part of the application! BUT, in the odd chance you’re right, and he left it blank, then the procedes become part of his estate.
That means, all his debts get added up – including final expenses, credit cards, car payments, mortgages – and the executor of the estate uses the procedes from the policy to pay off all the debts and bills. Then any money left over gets distributed to whomever the legal heir is.
Saying “I want my sister to handle everything” does NOT make them an executor – your sister will have to file with probate court, and the court will have to name her executor. There will be fees! It will COST MONEY! Which will, of course, come out of his estate. She’ll have to justify EVERY DIME that he owned, list out all his debts, show that she paid everything, and then the court will pick the heir – most likely the minor child (or their guardian) unless he was married.
An estate lawyer can help, but they are MOST useful BEFORE death, to avoid all the court costs and fees. Of course, they will COST, and those expenses will ALSO come out of the estate.
It would automatically revert to his closest living relative, in this case, his daughter. If he has designated his sister as the executor of his will, then she must go forth and abide by the terms in the will and whatever it states. However, no matter what it states, the daughter is the one who not only SHOULD receive the money from any life insurance, but WILL receive it under the law. It is strange this person would not have designated a beneficiary.