My stepfather left a will and a trust with my mom and brother as trustees. My stepfather raised me since I was five. Before he died, he told me he had a policy with my name on it, but my mom and brother won’t tell me. What could I do? Do I have rights?
—Ladana
The details of a will and life insurance policy
My deepest condolences on the loss of your stepfather, Ladana.
When a person dies, their assets can move in different ways. Some assets pass through the deceased’s estate and are distributed according to the will or, if there is no will, under provincial or territorial intestacy rules. Other assets pass outside the estate because they are jointly owned or have a named beneficiary, such as many life insurance policies or registered accounts with beneficiary designations.
How a life insurance policy is handled depends on who is named as beneficiary. If the policy lists the “estate” as beneficiary, the death benefit becomes part of the estate assets and will be distributed by the executor or trustees according to the will’s instructions. Sometimes the will directs the insurance proceeds to be held in trust or distributed to specific people. In other cases the proceeds simply form part of the estate residue and follow the general distribution rules.
How life insurance proceeds are paid
Many life insurance policies name an individual beneficiary directly. When that happens, the insurer typically pays the named beneficiary directly once it receives a death certificate and the beneficiary’s claim documentation. Because these proceeds bypass the estate, they can be paid relatively quickly and are generally not controlled by the estate trustees.
When the policy is payable to the estate, the funds are administered with the rest of the estate assets. That can delay payment and may trigger probate or estate administration taxes, but it gives the deceased more control over how the proceeds are allocated and may include contingencies for beneficiaries who predecease the policyholder.
If the policy names you as a direct beneficiary, your mother and brother cannot lawfully withhold the proceeds from you. As a beneficiary you have the right to claim the death benefit from the insurance company once you provide the insurer with the required documents, typically including a death certificate and a claim form.
What if family members don’t tell you about the policy?
Executors or trustees are generally obligated to inform beneficiaries named in a will about their entitlements. Beneficiaries are also entitled to receive full accounts of what the estate receives and pays out. However, estate administration can take considerable time—often many months or longer—so delay does not necessarily mean bad faith.
If you suspect your mother and brother are unaware of a policy, or if the policy names you directly, you can take steps yourself. If you know which insurance company issued the policy, contact that insurer and request information about any policy listing you as beneficiary. If you don’t know the insurer, there are services that help search for lost life insurance policies; in Canada, for example, there is an independent ombud service that assists with locating policies. That service is free and works with most major life insurers.
Also consider the possibility of insurance-related shares. Some older policies were issued by companies that later demutualized and issued shares to policyholders. If your stepfather held such shares, they are a separate asset from the insurance death benefit and would form part of the estate. These shares, if any, could generate dividend income and should appear on the deceased’s financial statements or be identifiable through the issuing company’s shareholder records. They would be treated as estate assets and distributed according to the will.
It’s also common for executors to take time to retain professional advice, collect estate documents, prepare an inventory of assets, and understand tax and legal obligations. If your mother and brother are acting as trustees, they may be consulting lawyers or accountants before communicating details. That can explain part of the delay.
Practical next steps
To protect your rights and move the process forward, consider these steps:
- Ask directly and politely for a copy of the will or an update on the estate administration; as a named beneficiary you are entitled to information.
- If you know the insurer, contact them and file a claim if you believe you are the named beneficiary. Provide the documents they request.
- If you don’t know the insurer, use a policy-locating service or ombud service that helps search for lost policies.
- Keep records of your communications and any documents you provide or receive.
- Consider seeking independent legal advice if you believe your rights are being denied or if the situation becomes contentious.
I hope you can reach a cooperative resolution with your family, Ladana. The loss of a loved one already causes emotional strain, and estate issues can add stress. In many cases the delay is administrative or due to trustees seeking professional guidance. At the same time, taking these practical steps can help you confirm whether you are indeed a beneficiary and accelerate any payments you are owed.
Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell financial products. If you have a question for Jason, please send it to [email protected].
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