Question about beneficiary of a life insurance claim

Thank all of you for your earnest replies to my questions. Today I received this letter from the insurance company. It is word for word, I have just deleted the names.
Quote:
At this time, we are unable to release any benefits under this policy. We have received notification from BIL’s attorney, that BIL is disputing the beneficiary designation made by your sister on September 5, 2001, naming you as the primary beneficiary.

We have been in contact with BIL’s attorney and he has provided us with a legal basis of Community Property laws in the state of Nevada. BIL has agreed to split the life insurance benefit equally with you. You would each be receiving $2500.00 without further legal proceedings. The life benefit payment is pending until this issue is resolved. Please let me know how you would like to proceed or if you intend on obtaining your own legal counsel. End Quote.

I have no desire to obtain an attorney. From the replies from you folks, it is apparent that due to Community Property laws, I will receive 1/2.
All of my sister’s holdings were in a trust with the BIL in control upon her death. And her holdings were extensive. She had many rentals, houses and apartments (all paid-off) stocks, bonds and even a mall. If you read my posts, you understand why she left it to me. It blows my mind that this person wants 1/2 of my sister’s gift.
So, it appears my options are to (1)hire an attorney. This has already been rejected. (2)Agree to the split. Or, maybe there is a 3rd? Do nothing, and let his attorney charge some more fees. I am embarrassed to admit it, but the ugly side of me is enjoying the fact that his share is being reduced by his attorney’s fees. So, the question is if I do nothing, will the attorney have to file some sort of CP paper (more fees)? Or, I presume he could attempt to somehow get the whole policy (by disputing the beneficiary designation)?
Thank you all for hanging in with me and this post. I am not asking for legal advice, but if it is out there, then excellent. Mostly curious in what you folks would do.

I guess it depends on your situation (how much would $2500 help you out?) but when my father died, he had a joint account that never had a beneficiary removed who should have been. We didn’t fight it and since the account had about 10K in it (we are in Nevada too), we got 5K and the “stale” beneficiary got the other 5K.

I’d consider yourself lucky you’ll be getting half.
I have a friend who’s father passed away and left a trust. One of the insurance policies was designated to my friend by the trust but his father neglected to get consent when he married. Because his wife didn’t sign off on the policy it could not pay out to the trust and the wife is receiving the pay out. This was a 500,000 dollar policy. The other assets are also substantial but they are designated correctly and not to my friend. The wife of his father is 30 years younger than his father was and only married for 6 years. She walks away with assets totaling about 4 million with my friend potentially not getting anything. The only saving grace is his brother inherited the business and it’s assets and is willing to share some of that piece of the pie.

Focusing on your sister’s memory and not her petty husband, accept their offer and go on with your life.

I’m not an expert on community property states, but it was my understanding that even in those states, pre-marital assets did not become part of the community marital property. Further, life insurance is something that passes outside of probate, so that shouldn’t change anything.

Unless Nevada has some unique law, I can’t imagine why the OP shouldn’t get 100% of the policy proceeds

I’m (also) not a community property person, but one issue might be whether the premiums for the policy were paid out of community funds. I’m not sure how any of that works.

I wouldn’t say “it’s apparent”. If anything, the presumption should be that you are the only person entitled to collect the life insurance proceeds. You’re the named beneficiary, and while the surrender value of the policy is a marital asset, the proceeds generally are not.

None of the people posting in this thread (including me) are lawyers licensed in the State of Nevada. In probate law, there is a principle called pretermission, which basically translates to “forgetting to update your will to include a new spouse or child.” Pretermitted spouses and children may be entitled to a share of the estate even if they are not mentioned in the will, because the courts assume the dead person simply forgot to update their will. Pretermission generally does not apply to policies of insurance, however, because those are contracts between the payee (your sister) and a third party. In certain cases, life insurance proceeds are included as part of the estate and therefore subject to pretermission rules of the probate code.

I am unable to find any indication that Nevada allows a surviving spouse to claim life insurance proceeds which are payable to a third party not a previous spouse or child of the decedent. That doesn’t mean it isn’t possibly true, of course.

I would be quite surprised if you aren’t entitled to the entire proceeds of the policy. I also strongly suggest you consult with a probate or family law attorney licensed to practice in Nevada - most will talk to you for a bit without charging a fee. At the very least, you should be able to determine if it’s worth disputing the matter.

As a point of reference, I’m in a community property state but not NV. I don’t have access right now to my life insurance paperwork, but I do have my 401K stuff handy and I know for both there is a marital status declaration and a spouse needs to sign if he/she is not named as the beneficiary. For the marital status declaration portion of my 401k paperwork the “Unmarried” choice states:

Obviously different states and different types of assets. And even if he’s right, it sure doesn’t mean the BiL isn’t acting like a butt about this whole thing.

Thank you SMW for your input/reply.
Given the fact that the BiL is now a millionaire, thanks to my sister’s trust, he is acting like a butt for fighting for this measly 5K which I could surely use.

IANAL - but I have always heard from financial publications that stuff you designate a beneficiary on goes to the person named - no matter what. Maybe I don’t live in the same type of state or whatever.

IMHO - as someone else already mentioned - you might want to get one of those lawyers with a free consult. Someone in estate law in your/her state.

So you can get a free lawyer and:

  1. if he tells you that the bil is right - you know to just take half and go on with your life
  2. if he tells you that the bil is wrong - you are in a worse situation - as you will probably take it anyway to avoid a dispute

But - there is a possibility that #1 will happen - and at least you will have piece of mind that LEGALLY you did the right thing

ETA: oops - just read the post by SMW - so I’ve read at least on thing now to the contrary :slight_smile:

Thanks to all of you that supported my quest to receive the full amount.
And thanks especially to Really Not All That Bright (whose username is a misnomer). His reply (in which he did some research) outlined the reasons I should receive the full amount. In a PM he suggested I seek a consultation with an community property attorney in the state. Which I did. The consult supported RNATB’s thoughts.
Without your support, thoughts, I would have rolled over and taken 1/2 the proceeds.
This MB rocks! Thank you Dopers!

That’s certainly good news. Sorry once again for your loss.

Excellent. Glad to hear it worked out.