John and Jane had a child together, Sam, and have been divorced for 30 years. Their child is now an adult but was not when they split. John died unmarried and Sam is his only child. Sam has a ten year old son.
Several years later, a life insurance policy is found that was paid up when Sam was 18 made payable to Jane which was ordered by the courts in the divorce settlement to help pay to support the minor child should the father die before the age of maturity.
Jane is the only beneficiary. Sam is not named anywhere. Jane did remarry but is now a widow.
If you were Jane, would you keep the life insurance money, would you give it to Sam, would you put it in trust for your grandson or do something else entirely?
The money belongs to Jane. She raised the child. I see no automatic reflexive emotion to give it to Sam at this point. However, assuming the normal relationship, Jane would certainly include Sam in her will and even gift him along the way as she feels like and can economically justify.
If Jane is otherwise financially secure, I think she should consult with Sam what he wants to do with the money. If he is also not struggling, invest it for the grandchild’s education.
If Jane needs the money she should keep it and use it for whatever she needs it for - it was to help raise the child and she did that - if she now has financial need it can be assumed that’s at least in part due to raising the child alone.
If she doesn’t need it she should consult with Sam - as the money was also intended to help support him/her, if s/he now has a financial need the money could be used to benefit him.
If no one needs it (lucky group), I agree it should be invested (at least in part) for grandchild’s future - education, travel money, whatever.
Personally, depending on the amount of $$ and the relationship, assuming no one needs the $$ I would propose partial investment for grandson, and perhaps a nice family trip or something.
The money isn’t for Sam. The money was directed to go to Sam’s support while a minor, but not to Sam. Regardless of when John died, the beneficiary was always intended to be Jane. Indeed, John, having died well after the divorce and after Sam reached adulthood, had ample opportunity to revise the intended beneficiary.
Would it be nice to give some or all of the money to Sam? Sure. But she’s under no legal or moral obligation to do so.
The money was court ordered for Jane in the event John wasn’t able to fulfill his support obligation. This was not the case. The policy was long forgotten about by everyone, I would assume including John as knowing him very well, he would have cashed it out long ago if he knew it had cash value.
To comment on the other posters. Sam is broke, Jane is financially secure if not rich. She owns her house and car outright and probably has a nice savings in addition to her social security.
MY opinion has always been that Jane should put it in trust for her grandson to collect when she dies or at an adult age.
It’s pretty clear that the money was supposed to go for the benefit of Sam, not Jane. So if you want to honor John’s wishes, all of the money should go to Sam.
Here are the player’s opinions: (I am not a player although I’ve known Sam and his late date for years. Jane I met at Sam’s wedding with her husband.)
Sam agrees with you and feels the money was to benefit him and since he was the only heir and the executor and spent the money out of his own pocket to bury John, he should get the money. He also feels that since John couldn’t stand Jane for years, he would roll over in his grave knowing that she benefited from his death.
Jane feels it is hers for raising Sam.
I say screw them both and give it to little Timmy for college.
Regardless of what Sam wants, the money is not his. As others have said, it was always intended for Jane (and as you say, Foxy, John could have revised the beneficiary but he didn’t). ETA: Too bad, John. Should have paid better attention to your business.
I think Jane should help Sam out with the money since she has plenty and Sam doesn’t, but she is under no obligation to do so.
I’m confused, a life insurance policy was bought but wasn’t set to expire the year Sam reached 18 and no further child support was required? The courts mandated John buy a life insurance policy longer then needed?
It’s up to Jane. But if she has any class she’ll give the money to Sam or put it in trust for her grandson. I’m assuming John maintained all his requirements for supporting Sam, so Jane would be taking money she did not earn or otherwise deserve. She has a legal right to the money, not a moral one.
I agree. Say to hell with both parties, and set up a trust for the kid. However, what Sam doesn’t realize is that unless there are other children not mentioned, Jane will likely use the money more wisely than he will, and there is more of a likelihood of money being left over at the end of the day.
Unless he is just simply broke because of bad luck, but if that were the case, it would seem that Jane would be more likely to give at least part of the money to him. Thinking again about it, it really depends on the reason why he is broke. Poor money management? Give it to Jane. Bad health not due to anything he did, then Jane is acting unconscionably, and karma should smack her.
At the very least, Jane should reimburse Sam for the cost of the funeral.
Divide it into thirds. (Not that she has any obligation to, of course. It is hers to do with, as she pleases. And most people resent other people’s opinions on how they ought to spend their money!)
One third Jane, she did raise the child.
One third Sam, probably what his Dad would have wanted and he’s in need.
One third child, in trust for his future, whatever it holds; school, wedding, travel.
Now everybody is happy some. Doesn’t seem that hard.
Legally, it is hers. Morally, she is listed as the beneficiary due to neglect or mistake, and it doesn’t reflect the wishes of the deceased. The policy was set up for the benefit of Sam, and presumably that desire remains. So morally speaking the intent of the policy was to benefit Sam, and so that is where the money should go. Unfortunately, far too often people conflate what is true legally speaking and what is right.