What Happens To A Life Insurance Beneficiary’s Money If They Suddenly Die Soon After Receiving It?

Lets say the life policy holder dies, has life insurance and there are 6 beneficiaries listed, which were all living during and after the death. One of the beneficiaries dies two weeks later. What could happen her portion of the money?

The life policy holder does not have a living trust but has a will. The one who died two weeks later has a Living Trust. Could that portion of the money go into her living trust even if she is not alive at the moment? I assume they could write a check under her name and it could be legally placed in her trust even if she is no longer living. She did not die on or before the life policy holder. They say there is no secondary beneficiary listed. So even if the secondary beneficiary listed, should it go to the next descendant.

  1. 406 POINTS
    Coby Higgins
    Licensed Independent Agent, Texas Insurance Alliance, Little Elm, TX
    If the deceased beneficiary had their trust listed as a beneficiary, the life insurance proceeds could be paid to the trust. If the deceased beneficiary was only listed by name and not their trust, then their estate via an executor would have to claim the life insurance proceeds and then that amount would become an estate asset to be distributed per their will instructions.
    Answered on June 19, 2017
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  2. 10968 POINTS
    Tim Wilhoit
    Owner, Your Friend 4 Life, Brentwood TN
    Based on your descriptions above, if the beneficiary died after the insured then the life insurance proceeds would pass to her regardless of the time period of death. The contingent beneficiary or second is not relevant in this case. If she is listed as the beneficiary, proceeds would pay to her estate and the attorney for the trust would have to move the funds into the trust. If her trust was listed as the beneficiary then those funds would be deposited to the trust without probate. Remember life insurance proceeds are tax free and paid outside of probate unless they are paid to the estate. Hopefully, the attorney from the trust addressed this issue prior to her death. My condolences for your loss.
    Answered on July 23, 2017
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  3. 723 POINTS
    Everett Debrow, Jr.
    Principal Agent, Patriarch Associates,LLC, Opelika, Alabama
    Hello! This is a sharp question!
    Let's say the six beneficiaries are to receive a benefit of $600,000 in insurance proceeds, and each one gets $100,000.
    In the case of the beneficiary who dies shortly thereafter, her $100,000 will be treated as she had requested before her death. The proceeds will go to her living trust only if she had requested that they be used in that manner; if not, her $100,000 goes to her estate. If it causes the estate value to exceed the exemption threshold, then it is taxed. As far as secondary beneficiaries go, they are a non-factor in this scenario, as all primaries took part in receiving the benefit.
    Answered on October 16, 2017
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  4. 63333 POINTS
    Peggy Mace
    Most of the U.S.
    For anyone who finds themselves in the scenario where a life insurance beneficiary passes away shortly after receiving their portion of the death benefit of another person's policy, one basic fact will help you start to wade through what must feel like a daunting situation. Two deaths close together can be emotionally and financially devastating. But life insurance actually helps in so many ways.

    The basic fact is, if life insurance is left to a named person or persons, that trumps everything else. When the insured person dies, the money will go to those beneficiaries who are still alive. Period. There is no looking back.

    While life insurance generally passes to the beneficiary tax free, once it is in the estate and the beneficiary passes, it will have to go through probate, if there is no will. As the other agents stated, if the proceeds were designated to be put into the living trust, that may still be possible. This article from LegalZoom may help. http://info.legalzoom.com/distribute-assets-living-trust-after-death-20613.html
    Answered on April 17, 2018
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