08 Jun Who gets life insurance payout when the beneficiary dies?

Q. My dad passed away five years ago in June. My mother and I just recently found out that a family friend left my father insurance money of over $7,000. Given that she was married to my father, shouldn’t she be able to get that money? What can we do?
— Confused

A. We’re going to make several assumptions to give you an answer.

First, we’re going to assume that you’re talking about the proceeds from a life insurance policy and that it was purchased in New Jersey.

You didn’t say who died first — your father or his friend.

Depending on who died first, the question has very different answers, said Tom Szieber, a trusts and estates attorney at Herold Law in Warren.

If the family friend died first, and assuming your father never claimed the proceeds, then, pursuant to N.J.S.A. 46:30B‐22, the proceeds would be presumed abandoned because more than three years have passed since the insured died, he said.

If that’s the case, the executor of your dad’s estate would need to request a property search and then file a claim through the New Jersey Unclaimed Property Administration, he said.

“If the executor obtained the proceeds for the questioner’s father’s estate, then they would be distributed in accordance with his will — if he had one — or New Jersey intestacy law if he did not,” Szieber said. “The questioner’s mother would not be entitled to the proceeds directly from the policy, as the beneficiary — the questioner’s father — was alive at the time of the insured’s death.”

But if your dad died before the family friend, then the policy proceeds would be the property of the policy’s contingent beneficiary, if there was one, Szieber said. “If not, they would pass in accordance with the language of the policy itself.”

Often, the policy, if there is no contingent beneficiary, will direct that the proceeds pass to the estate of the insured and be distributed in accordance with the family friend’s will or New Jersey intestacy law if there was no will, he said.

“Unless the questioner’s mother was in the family friend’s will, she would not have much of a case to recover the life insurance proceeds,” he said.

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This story was originally published on June 8, 2021.

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