Dear Mr. Premack: My parents’ Wills left everything to the surviving spouse, and each Will named their three children to receive everything when both parents died. Mother died a couple years ago. Dad changed the beneficiaries on his life insurance policies to the three kids. My sister was killed in an accident a couple of months ago, leaving only one surviving son. When dad eventually dies, does his property and insurance go to my brother and me only, or does my nephew get my sister’s share? Should dad remove my sister from the insurance policies? — J.R.
The first question I would ask you is: when your mother died, was her Will taken before a court and admitted to probate? If yes, then your father is now recognized as owner of all the assets. If no, then he should do so very quickly before the four-year statute of limitations passes. If he fails to admit her Will to probate, there is no clear public record of how her half was to be distributed.
Once your father is recognized as owning all the assets, it is important to realize that some items are categorized as “testamentary” and some as “non-testamentary”. His life insurance proceeds will be paid directly to the beneficiaries he named on the policy. His Will has no sway over those proceeds unless he told the insurance company to pay the funds to his executor.
Generally, when one of the named beneficiaries on an insurance policy dies before the insured person (like your sister dying before your father) the insurance company simply scratches that name from the list. The policy proceeds would likely be paid only to you and the other surviving child. Her son would not receive any part of the policy.
On the other hand, his “property” is likely to be testamentary in character so that it passes according to the terms of his Will. I am a strong advocate for specificity and clarity in people’s Wills. Vague instructions create confusion and should be avoided. As I do not have a copy of your father’s Will, I cannot say whether his instructions allow his grandson to receive a share.
Since your father is still living, I would suggest that he speak with his estate-planning attorney. Circumstances have changed with the death of his wife and daughter. He should ask if the wording in his current Will matches his current wishes. Does he want his grandson to receive the deceased daughter’s share? He should revise the Will to provide a specific answer to the question you raised.
After speaking to his attorney, he might also decide to change the beneficiary designation on his life insurance – be it to omit his deceased daughter and add his grandson, or just to specify that the proceeds are payable only to his two surviving children. The outcome should be entirely up to your father, but he must take action to clarify his instructions.
Many people are reluctant to seek advice from a lawyer, whether they are intimidated or feel that it will be too expensive. Considering that it would devastatingly expensive for the Will to be faulty or for the life insurance to be paid to the wrong people, the certainty gained from a legal consult is very well worth the cost.
Paul Premack is a Certified Elder Law Attorney and a Five Star Wealth Manager (Texas Monthly Magazine 2009-2013) practicing estate planning and probate law in San Antonio.
Original Publication: San Antonio Express News, April 30, 2010