Death without a Named Beneficiary

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PostPosted: Wed Jan 20, 2010 4:56 am   Post subject: Death without a Named Beneficiary  

Hi All,



I'm sharing a message with you that we received through email-



Quote:
HELP!( In Georgia)

I have been reading on your site about Death without a Named Beneficiary and I am very confused (just not smart enough to understand),

What I would like to know is this.

(1)Do you have to put down a beneficiary on a life policy when you buy it?

(2)If beneficiary is spouse and they are deceased then does it go to children or to the Estate?

(3) If there is no beneficiary listed, spouse is deceased and there are children and there is an Estate where does it go?

(4)If life Insurance are paid to an Estate can this be done before probating a will and can life Insurance Checks be paid directly to a Funeral Home





Thank You!!!

Bee




Regards,



Lakemen


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PostPosted: Wed Jan 20, 2010 5:31 am   Post subject:   

See, lets get some things very clear over here-



* You may or may not choose a beneficiary

* In case you don't wish to choose anyone as 'beneficiary', then it would be on your state laws to decide who gets the policy benefit.

* You have the right to decide your beneficiaries following the guidelines laid down by your state or the policy itself.

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PostPosted: Wed Jan 20, 2010 6:02 am   Post subject:   

In the event there are no named beneficiaries alive at the time of the insured's death, just about every state decrees that the death benefit is payable to the decedent's estate and would therefore be included in the insureds' gross estate values. This, obviously, would make the death benefit subject to state estate laws and probate.



Regarding specific concerns of the OP:

Quote:
If life Insurance are paid to an Estate can this be done before probating a will and can life Insurance Checks be paid directly to a Funeral Home




As stated above, since the proceeds of the life insurance policy are normally paid directly to decedent's estate as the "default" beneficiary, they are included in probatable assets and potentially subject to estate taxation on a state and federal level.



Normally, checks can only be made out to the designated beneficiary unless formal instruction were made prior to the insured's death through other estate planning methods.



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PostPosted: Wed Jan 20, 2010 3:38 pm   Post subject:   

To address the question about the funeral home if there is no beneficiary and the proceeds are paid to the estate the answer is no. The funeral home would then become a creditor and would have to wait for funds to be paid through the probate process.



Additionally, even if there are beneficiaries named, life insurance proceeds are includable in the insured's gross estate so long as he or she has ownership of the policy. Not usually a big deal since the amount isn't enough to trigger an estate tax problem, especially this year.

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PostPosted: Wed Jan 20, 2010 6:04 pm   Post subject:   

Bee, usually, if there is no named beneficiary, the insurance company won't issue a policy. (I say "normally" because this isn't always the case.) Since beneficiaries can be changed, it certainly makes sense to name someone as the beneficiary so that the choice belongs to you.



If the beneficiary is deceased, a policy may have a contingent beneficiary. The contingent beneficiary would then get the money. If at the time of death, there is no living listed beneficiary or contingent beneficiary, it is possible that the insurance contract may have language that covers this situation. This would be a default beneficiary. It is also possible that state law would dictate what would happen.



Life insurance is an asset of the owner of the policy. If the owner and the insured is the same person, life insurance will be part of their taxable estate. If the beneficiary (either named or unnamed) ends up being their estate, it is an asset that will go through probate.

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PostPosted: Wed Jan 20, 2010 6:17 pm   Post subject:   

Quote:
In the event there are no named beneficiaries alive at the time of the insured's death, just about every state decrees that the death benefit is payable to the decedent's estate and would therefore be included in the insureds' gross estate values.




Hopefully, Gary hasn't made a comeback and we can have an intelligent discussion about this. I'm not saying that this law doesn't exist, but I have never seen it. Let me explain why I have my doubts and why I think a law like that doesn't make sense.



Lots of policies are not owned by the insured. Laws need to take this into consideration. If I own a policy on you and there are no living beneficiaries at your death, it doesn't make sense for the money to be paid to your estate. It makes much more sense for the policy to get paid to me as the owner of the policy.



I have seen policies that specifically say (not exact language) "if there are no living beneficiaries, the policy will be paid to the owner if living or the owner's estate if deceased"



With this language, it is only going to the insured's estate if the insured is the owner. We can't make an assumption that the insured and the owner will be the same person.



Let's keep in mind that it is possible to change both the insured and the owner of a life insurance policy.
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PostPosted: Sun Jan 24, 2010 4:33 am   Post subject:   

Quote:
Bee, usually, if there is no named beneficiary, the insurance company won't issue a policy. (I say "normally" because this isn't always the case.) Since beneficiaries can be changed, it certainly makes sense to name someone as the beneficiary so that the choice belongs to you.




This is rarely the case. There is no requirement that a beneficiary be named at all. Obviously I haven't dealt with every insurance company that exists, but I've never known of one that would decline an application on the basis of no beneficiary. In California, it would be considered an "unfair business practice".



Having said that, one would have to wonder why someone is even contemplating a life policy if they have no one they want to name as a beneficiary. I certainly would ask, "Why are we here?"



Quote:
I have seen policies that specifically say (not exact language) "if there are no living beneficiaries, the policy will be paid to the owner if living or the owner's estate if deceased" With this language, it is only going to the insured's estate if the insured is the owner. We can't make an assumption that the insured and the owner will be the same person.




Absolutely true! And it's also true of the cash value in a CV policy at endowment. If the insured is not the owner, it's the owner who gets the check.



What's becoming even more common about beneficiaries are policy endorsements (or paragraphs in the contract) that state (or words to the effect), "If the owner names a non-natural person as the beneficiary, the owner must also state the name of a natural person to receive the policy proceeds on behalf of the non-natural person."



I had to laugh the first time I saw one of these about 7-8 years ago. It's obviously intended to cover those persons who want to name their dog, cat, parrot, ferret, or goldfish the beneficiary. But the language is so ambiguous that it describes a trust.



The estate is the last place I would ever want to see a person's life insurance proceeds end up. Before anyone (or any thing) of value gets the money, creditors will have a field day -- and I could care less about them. It's always best to have a named primary beneficiary, and, usually, a named contingent beneficiary (and "a" is not limited to just "one"), as a "just in case".



And vague beneficiary statements, like "All my children" can invite trouble, too. Who knows how many Tiger W has running around now?


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PostPosted: Sun Jan 09, 2011 10:34 am   Post subject: Im named  

What if im named the beneficiary, but i dont recall the person who named me? What do i do?


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PostPosted: Mon Jan 10, 2011 2:23 am   Post subject:   

Quote:
What if im named the beneficiary, but i dont recall the person who named me?




How would you even know this? To those of us who work in the industry, the question makes no sense.



Who are you supposed to be the beneficiary of?


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PostPosted: Wed Jul 16, 2014 11:24 pm   Post subject: deceased with no living relatives  

I have been taking care of a deceased friend's affairs. I paid for the cremation, since he had no living relatives. I came across a Met Life dividend check for interest. The statement shows a market value of under $500. What do you advise I do? I have tried to find a phone number for Met Life, which I have had little success.


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PostPosted: Thu Jul 17, 2014 2:01 am   Post subject:   

Quote:
I have tried to find a phone number for Met Life, which I have had little success
Really? It's only the largest life insurance company in America. If only you had "googled" Metlife, you might have found this: 1-800-METLIFE


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PostPosted: Wed May 31, 2017 12:57 am   Post subject: Beneficiary for life ins.policy  

With no named beneficiary on a life ins policy, who would be the likely beneficiary/


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