Concerns over management of life insurance benefits for minor children.

Question

I am concerned about the management of my late son's life insurance policy benefits. He worked for the federal Department of Defense and did not designate a beneficiary, so the primary beneficiaries are his minor children. His mother was supposed to establish a Thrift Savings Plan to hold the funds until the children reached 18. However, I suspect she unlawfully accessed and squandered the money based on her excessive purchases shortly after his passing 12 years ago. As his parent, and the next beneficiary on the policy, what recourse do I have to open an investigation or request an accounting of the funds?

Anthony M. Avery · Answer

I doubt you have any legal standing here.  And there are probably no causes of actions available.  If a crime occurred, the SOL has run for both State and Federal, and that was probably what should have been looked into. If the Policy has already been paid out, then there are  not any "next beneficiaries".    You might research any Federal Statutes that might apply here, but apparently the guardian that got the monies for the benefit of the Children had the legal ownership of the funds, but held them in a fiduciary capacity for the minors' benefit.

James L. Arrasmith · Answer

I'm really sorry you're dealing with this—it’s heartbreaking enough to lose a child, and even more difficult when there are questions about how their legacy was handled. If your late son didn’t name a beneficiary for his life insurance, federal law typically directs benefits to surviving children, which should have triggered a custodial or fiduciary arrangement for any minors. If their mother received those funds on their behalf, she would have been acting in a fiduciary capacity, and that role comes with legal duties—including protecting and preserving the children's inheritance. 
 
You can start by requesting information from the Office of Federal Employees' Group Life Insurance (OFEGLI) or the Thrift Savings Plan (TSP), depending on where the benefits were held. Explain your relationship to the deceased, that the children were minors at the time, and your concern that the funds may have been misused. If the children are now adults, they also have the right to request a full accounting of any benefits paid out in their name and whether a formal custodial account or trust was created. 
 
If you believe fraud occurred, you can contact the Office of the Inspector General for the agency your son worked for, or the appropriate federal benefits office, to request an investigation. Misuse of federal survivor benefits or insurance money for minors is serious and could lead to legal consequences if proven. You've carried this worry for a long time—you deserve answers, and the children deserve justice if anything was mishandled.

Q: Concerns over management of life insurance benefits for minor children.