Who gets the proceeds from this life insurance policy?

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Q. My daughter’s husband just died unexpectedly and it turns out he had his parents as the beneficiary of his work life insurance. I guess he never changed it. His parents both died first, though. I know he would have wanted this to go to provide for his children. Can his siblings fight for this money?
— Mother-in-law

A. Who has the legal right to the proceeds of the life insurance policy is determined by beneficiary designations, and after that, it’s based on state law.

We’re going to assume this is happening in the state of New Jersey.

While anyone can fight for the life insurance proceeds, the deceased’s siblings don’t have a legal right to the money unless they’re listed as alternative beneficiaries on the policy, said Nancy Heslin Reading, an estate planning attorney with Reading Law Firm in Newton.

If they’re not, she said, the policy will state in the fine print what happens if the beneficiaries predecease the insured. It can be one of two things.

“The policy — most likely the employer’s human resources department will have a copy of this — will either say that the proceeds of the policy will pass to the employee’s estate to be distributed according to his will, or it will say that the proceeds will pass under the intestacy statute NJSA 3B:5.”

Reading said if the decedent has no children from a prior marriage, the entire proceeds should pass to his wife.

She said your daughter should call her husband’s human resources department and if they do not know the answer, she should call the carrier.

“If for some reason they conclude they are not authorized to answer questions about this policy, ask a very global question: `In all situations where the beneficiaries predecease the inured, how is the benefit distributed?” Heading said. “If the siblings are not the alternate beneficiaries, they are not likely to get the money.”

This is a good reminder to all of us: Make sure your beneficiary designations are updated to reflect your intentions.

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This story was originally published on Dec. 16, 2019.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.