28 Dec My brother died. Who has a claim to his pension?

Q. My brother passed away two years ago. He was never married or had children. He had a pension but died before retirement age and was on permanent disability. Who has a claim to his pension?
— Heir, maybe?

A. We’re sorry to hear about your brother.

The answer to your question depends on several issues.

First, in determining how property is distributed at death, it is helpful to distinguish between probate assets and non-probate assets.

Basically, probate assets are assets which the decedent owns alone, with no named beneficiary, or assets held by the decedent as tenants-in-common with another person, said Catherine Romania, an estate planning attorney with Witman Stadtmauer in Florham Park.

Probate assets will pass in accordance with the terms of the decedent’s will or if the decedent has no will, then by the intestacy statute, she said.

“Non-probate assets include assets which the decedent owns jointly with another person and pass by rights of survivorship, as well as assets which designate a beneficiary, such as payable or transfer on death accounts, life insurance and retirement assets including pension benefits,” Romania said. “Non-probate assets pass to the joint survivor or named beneficiary and are not controlled by the decedent’s will or the laws of intestacy, unless the named beneficiary or the beneficiary by default is the decedent’s estate.”

Importantly, not all pension plans have survivor benefits. Or, the participant may have chosen a form of payment that did not provide for survivor benefits, Romania said.

Also, the payment of benefits depends on the terms of the plan and whether the deceased participant was vested in the plan before or at death, she said. Vested means the decedent had an ownership interest or accrued benefits in his or her account. Vesting requirements depend on the type of plan and are generally based on the hours per year worked and years of service in the plan, she said

“If survivor benefits are payable, the deceased participant should have completed a beneficiary designation form setting forth the name of the beneficiary,” Romania said. “If no beneficiary designation form was completed, the plan will have default provisions, such as payable to the spouse, or the decedent’s estate.”

You should contact the pension provider and find out if there are survivor benefits, and if so, whether a beneficiary was named. If no beneficiary was named, find out what the plan provides with respect to a default payment provision, she said.

“If proceeds are payable to the decedent’s estate, and there is no will, in the absence of a spouse or children, the laws of intestacy provide that the property will pass to the decedent’s parents equally or all to the surviving parent, and if none, to the descendants of the decedent’s parents — siblings and including children of any deceased sibling,” she said.

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This story was originally published on Dec. 28, 2022.

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.