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If a parent dies and leaves a will that divides the estate equally, but also leaves a life insurance plan that names only one child as a beneficiary, can the other siblings force the life insurance proceeds to become part of the estate? And if so, under what conditions?

  • Great Question! – Alex B Feb 2 '12 at 19:03
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Insurance is a contract, and beneficiary is just one of the terms of the contract. The deceased have never owned the insurance proceeds, so this money cannot by definition be in the estate or part of the estate. Its the money of the beneficiary, not the deceased.

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    In the US, proceeds of a life insurance policy are part of the tax estate if not the probate estate. i.e. subject to estate tax. – JoeTaxpayer Feb 3 '12 at 4:15
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    They are definitely not part of the probate estate though. It is the same for any other contract or legal document which specifies a beneficiary on death, including Pay on Death assets. Probate (the will) only deals with stuff that is not already legally bound to a party. – jamuraa Feb 4 '12 at 1:22
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An insurance beneficiary designation is a binding and irrevocable declaration independent of the estate. (Unless the estate is designated as the beneficiary.) You probably would not be able to challenge it, unless there was some sort of mechanical issue with the paperwork (unsigned form, etc) or person owning the policy was coerced, dead or incompetent when they made the designation.

If the person who was named is deceased, provincial law would govern how the proceeds were to be distributed.

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By "force" you mean contest by legal means.

Noting that you are in Canada, I would just share with you what the rules are here, in the United States.

There are a number of accounts which bypass the will and probate. These include our 401(k) and other similar retirement plans, the IRA, Roth IRA, etc, and Insurance proceeds.

This leads towards specific advice regarding these accounts, such as the warning that while living, you review the beneficiaries for each and every one of these with every life change, death of any current beneficiary, birth of any additional children, divorce/marriage. There are cases where a man dies, and the former spouse, 20 years since divorced, gets the retirement account, the current wife's name never put on the account.

I am curious if Canada has similar strict rules. The sibling not listed can bring a suit forward, but is not likely to collect.

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Personally feel that If someone has made specific provision for disposable of a particular assets or rights, it should be disposed in such manner.

Will or probate shall be applicable for assets for which there are no specific conditions.

A typical situation may arise when the person making the will makes a contradictory position in the will and the contract.

In such a situation, I feel, Insurance company will honor the contract and not the will. If is to be construed otherwise, the entire exercise of making nominations etc. will be futile. The person getting the right may have a claim from such a person depending upon the nature of specific case.

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