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My mother-in-law left her $1 million life-insurance policy to my brother-in-law, but her will says she wants him to share it with my husband. What can we do?

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Dear Quentin,

My husband and I took care of my mother-in-law for eight years. Around five years ago we gave up the house we were renting to save her home because she could not afford it, and because she could no longer live alone. We ended up taking out a loan to buy her house. It was not gifted and we did not incur her debt; instead, we paid what the house was appraised for. 

My mother-in-law passed away in February and the only thing that she had for her two sons was a life-insurance plan worth $1 million. She added only my brother-in-law as beneficiary, but stated in her will that he is to share it with his brother. My brother-in-law says we inherited the house, even though we paid full price for it and took care of her, without his help. 

Is there anything more we can do so my husband can get what his mother wanted him to have?

Unlucky in Tennessee

Dear Unlucky,

Your brother-in-law is on sound ground, legally if not ethically. In most cases, the beneficiary designation on a life-insurance policy trumps a will. The former is a legal contract between the holder of the policy and the insurance company. It’s a cautionary tale for anyone out there with a life-insurance policy to change beneficiaries to align with their wishes. 

It’s likely that your brother-in-law is well aware that you purchased your mother-in-law’s house, and that any profit she made was deposited in her bank account and used for her care. It never hurts to put such transactions down in black-and-white. Seeing that may — or may not — change his opinion. “You got the house” gives him an easy, if not convincing, “out.”

However, it’s possible to overturn a life-insurance beneficiary designation if it explicitly goes against the terms of a divorce decree. In the Supreme Court case of “Sveen v. Melin,” the children of the deceased were awarded the proceeds from the life-insurance policy, not the ex-wife who was named as beneficiary on the agreement. 

The law presumed that what her ex-husband wanted after their divorce was incorrect. The ruling stated: “Thus, if a person designates a spouse as a life insurance beneficiary and later gets divorced, Minnesota law provides that the beneficiary designation is automatically revoked. At least twenty-eight other states have enacted similar revocation-upon-divorce statutes.”

You and your husband are, on the other hand, probably out of luck and must rely on the discretion of your brother-in-law. It sounds like he’s either disgruntled with the way you handled the property purchase and/or he knows that the $1 million insurance policy belongs to him regardless of the will, and he’s already dreaming up plans to spend the money. 

Yocan email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

The Moneyist regrets he cannot reply to questions individually.

More from Quentin Fottrell:

• ‘I’ve felt like an outsider my whole life’: My father died without a will, leaving behind my stepmother and her 4 children. Do I have any rights to his estate?
• ‘He was infatuated with her’: My brother had a drinking problem and took his own life. He left $6 million to his former girlfriend who used to buy him alcohol
• She had a will, but it was null and void’: My friend and her sister are fighting over their mother’s life-insurance policy and bank account. Who should win out?

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