Life Insurance - My mother recently died and left a fully paid up life policy proposed by her father?

Question

We have contacted the Prudential about this and they are saying that the benificiary would be my mothers fathers next of kin in this case my aunt who is the only one from the family still alive. Our understanding is that as my grandfather died before my mother it became an own life policy (ie owned by my mother) so it should be part of her estater ? Any ideas Thanks

Answer 1

The only thing is how the policy was structured at the time of your mother's death.  Appropriately named beneficiaries precede estate distributions (contract before probate).  So if your aunt is the properly named beneficiary, it does not go to your mother's estate.  If the beneficiary is not properly named, the policy becomes part of the owner's estate, whoever that was.  The insured (your mother) is not necessarily the owner.

If you have questions, you might want to consider working with a probate attorney.

Answer 2

Get a lawyer... I had to get one when my dad died, for almost the same problem

Answer 3

Unless there is more to it than you report, I'm afraid that Prudential is telling you accurate information.  In all cases like this, the beneficiary designation is everything.  The ownership of the policy does not "automatically" get transferred to someone else.

Since the beneficiary was never changed when your grandfather died, his next of kin would be the recipient of the money due him upon your mother's death.  That is why it's always a good idea to list a "contingent" beneficiary on all IRAs, annuities, life insurance contracts, etc.  

Perhaps you can convince your aunt to do the right thing and gift you the money.

Answer 4

Not so, when my father died we had all his insurances paid out immediately, including one his mother took out on him in 1925. She died in 1941, my father died in 1993.

Answer 5

The answer to the question depends entirely on how the policy was set up at outset.  You have said that it was proposed by your mother's father which might suggest that it was his policy (i.e. he owned the right to the benefit).  Unless it was set up in trust for your mother then it would form part of your grandfather's estate.

If that was the case, the policy would have remained an asset of your granfather's estate.  Therefore it woudl depend on the instruction in his will with regard to the policy (specifically) or just the general assests if it had not had a specific instruction with it.  

Insurance companies have been known to make mistakes regarding the set up of policies, so you shoudl ensure that you clarify whether or not there is any record of the policy having been written in trust for your mother before deciding what to do.