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Does my daughter in law deserve all of my son's estate even if he didn't update his will?

A fellow caregiver asked...

my son past away and i just learned i am the beneficiary to a life insurance policy her purchased many years ago before he was married. I am wanted to split it between my children and me - five ways which includes my son's widow. My daughter in law (widow) thinks she should get all the benefit because she is sure her husband my son just never got around to changing the beneficiary. We'll never know what he intended but i can't help thinking splitting it is the fairest way. does my daughter in law deserve all benefit?

Expert Answer

Judy and Fred co-mediate family property and financial conflicts, and each work individually as mediators as well. Judy Barber, a mediator and family business consultant, assists clients in resolving overlapping family and money conflicts so they are better able to make sound estate planning decisions. Frederick Hertz is an attorney and mediator who specializes in resolving co-ownership matters involving families, siblings, spouses, cohabitants and domestic partners.

Legally the payout from your son's life insurance policy belongs to you, because that is whom he designated as the beneficiary. Whatever your daughter-in-law believes your son might have truly intended, you are in control of how the funds are distributed. Thus, there really isn't a legal issue "“ unless your daughter-in-law is somehow claiming that your son was not legally competent at the time he filled out the insurance form.

Your desire to split the money in equal amounts makes a lot of sense to us. Everyone will have been treated in the same manner and this avoids an interpretation that you have favorites. Often in families where there are unequal distributions those who get less than others feel undervalued.

However, there may be other extenuating circumstances for you to consider. Does your daughter-in-law have enough income to live on without drastically downsizing her lifestyle? Must she take your son's place as the breadwinner for herself and perhaps children? If so, she may need time and some financial help to complete training or go back to school and develop a career that qualifies her to earn more income. If your daughter-in-law will experience a financial transition, will her one-fifth share of the insurance policy cover the costs?

We can see that this scenario is more complicated than your original plan but it may still be the best alternative for everyone. If your daughter-in-law does have a financial need you also might consider making a loan to her, with an agreement with her that specifies that the money will be paid back to you on a fixed date.

Whatever plan you settle on, we encourage you to sit down with family members or write to them, all the same letter that explains why you split up the proceeds from the life-insurance policy in the way that you did. Your taking that extra step may well prevent any misunderstanding of your intentions.