Northridge, CA asked in Estate Planning and Probate for California

Q: Does a beneficiary have equity rights to insurance settlement proceeds received by the estate prior to grantors dea

In California a gift (a classic car) is granted via living trust, then is totally destroyed in a fire before the grantors death whereby a $39,000 insurance claim is paid to the grantor/estate. Subsequently the trust is not amended still reflecting the gift to the beneficiary at the grantors time of death

Does a beneficiary have property rights or an equity claim to insurance settlement proceeds received into the estate for the gifted asset? Or do those specific insurance proceeds merge with the decedent's general cash assets, (which would otherwise not include the $39,000 claim value of the gift in question) and then get divided among all beneficiaries according the trust asset percentage distribution schedule ?

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1 Lawyer Answer
Rebecca Sommer
Rebecca Sommer
  • Estate Planning Lawyer
  • Anaheim, CA
  • Licensed in California

A: The outcome will depend on the language in the trust document providing the gift. Generally, if a specifically listed item is given to a specific person, if the item no longer exists at the time of the decedent's death, then the gift fails. For example, "To my niece MARY SMITH I give my great-aunt's emerald brooch which is described as..." If at the time of death the brooch cannot be found (whether it's due to being stolen, lost, destroyed, sold, etc.), the gift fails.

However, you will want to have a professional look at the language of the trust document to confirm as these gifts can be modified either by the language choice in the gift itself or in other sections of the trust document.

Howard E. Kane agrees with this answer

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