Life Insurance: A Deceased Beneficiary's Share May Pass to His or Her Heirs
In a ruling dated November 27, 2025, the Court of Cassation held that if a beneficiary dies before accepting the bequest, his or her share may pass to his or her heirs, even in the absence of a substitution clause. This decision calls for a reevaluation of beneficiary clauses.
The case, reported by *Le Monde*, stems from an ordinary situation. In 1989, a widow took out a life insurance policy that included the standard clause: her spouse; failing that, her children in equal shares; failing that, her legal heirs.
Upon her death in 2017—her husband having already passed away—the estate was to be divided equally between her son and her daughter. However, her son died two weeks later, before he had a chance to accept his designation as beneficiary. Her adopted son then claimed half of the portion of the estate that was to have gone to his father, amounting to 75,622 euros.
The insurer objects, arguing that the entire estate should go to the surviving daughter—the deceased’s sister—on the grounds that no substitution clause was included. The courts hearing the case issued conflicting rulings, prompting the adopted son to bring the dispute before the Court of Cassation.
This is not a trivial matter: it concerns the disposition of substantial sums of money and a common issue—namely, what happens to the beneficiary who dies during the period between the policyholder’s death and the acceptance of the clause. This period, though often brief, is nevertheless sufficient to spark a dispute among heirs, especially since the standardized clauses in older contracts did not anticipate this scenario.
A standard clause at the heart of the dispute
On November 27, 2025, the Second Civil Chamber ruled in favor of the adopted grandson. Its reasoning: the designation of two beneficiaries in equal shares creates two distinct stipulations for third parties, each following its own course. Consequently, the heirs of a deceased beneficiary may receive his or her share, even in the presence of other beneficiaries of the same rank, unless the policyholder has expressly stated otherwise. Above all, the mere presence of another beneficiary of the same rank is not sufficient to establish such a contrary intent: there must be a positive element—a clear intention on the part of the policyholder to exclude this transfer. In other words, the silence of the clause does not benefit the surviving beneficiary, contrary to what the insurer argued.
The Court concurs with the analysis of the Insurance Mediation Office, which had determined as early as February 2024 that the provision passes to the heirs of the deceased beneficiary, unless the policyholder expressly stated otherwise. The case is being remanded to the Toulouse Court of Appeals: to retain the full amount of the death benefit, the daughter will have to prove that her mother did not want her brother’s share to go to her grandson. The burden of proof therefore rests with the party challenging the transfer—a decisive factor in practice, since determining the intent of a person who died years earlier is often impossible.
The Implications for the Transfer of
For high-net-worth clients, the lesson can be summed up in a few words: the wording of the beneficiary clause determines the outcome. A standard clause, adopted without careful consideration, leaves room for interpretation and litigation—sometimes years after the death.
Anyone who wishes to control the distribution of their assets has several options at their disposal. They can name specific beneficiaries by name, include a representation clause if they wish for a predeceased beneficiary’s share to pass to that beneficiary’s own children, or, conversely, explicitly exclude that beneficiary so that the other beneficiaries may divide the assets among themselves.
Recent contracts also allow for option clauses—whether split or with secondary beneficiaries—that tailor the transfer of assets to the family’s specific goals and composition. It is advisable to review the beneficiary designations after every family event: death, birth, marriage, divorce, or the formation of a blended family—all of which are moments when a provision drafted decades earlier no longer reflects the actual situation.
In principle, life insurance proceeds are exempt from inheritance laws and are subject to their own tax rules, but this benefit applies only if the policy clause unambiguously expresses the policyholder’s intent. It is best to have the clause reviewed by your advisor or notary rather than relying on a preprinted form, and to keep a written record of your intentions if they deviate from the standard template.
Otherwise, a judge will have to reconstruct the deceased’s intent based on circumstantial evidence, with the risk that the outcome will differ from what was intended and that the funds will be frozen until the dispute is resolved.
