Appeal, No. 171, March T., 1955, from decree of Orphans' Court of Allegheny County, 1951, No. 4215, in re Estate of Walter K. Beall, Dec'd. Decree reversed.
William Claney Smith, Jr., for appellants.
Thomas W. Neely, Jr., for appellee.
Before Stern, C.j., Stearne, Jones, Musmanno and Arnold, JJ.
OPINION BY MR. JUSTICE JONES
Walter K. Beall died testate on July 19, 1951. His will, which he had executed in 1932 while married, was rendered largely inoperative because of the effect of his subsequent divorce on his testamentary dispositions to his wife. He left surviving him two children who, by reason of the exclusion of their mother, became the accelerated and sole legatees in equal shares under their father's will. One of the children, a daughter, is an adult; the other is a minor son of whose estate Fidelity
Trust Company, of Pittsburgh, the executor, is testamentary guardian.
An ostensible asset of the decedent's estate, as shown by the executor's account, was a $10,000 National Service Life insurance policy which the insured had taken out on April 13, 1944, while he was in the military service of the United States. The insured had originally named his wife as the beneficiary of the policy, but after their divorce he had made his children the beneficiaries with his father as contingent beneficiary. However, on July 9, 1951, just ten days before his death, he initiated a further change of beneficiary as per the following requested endorsement: "If married and living with my wife, payable to her. If not married or estranged, to my estate." He died without having remarried. The veterans' Administration recognized the insured's estate as the beneficiary of the National Service policy and paid the proceeds to his executor. Without the proceeds of the insurance policy, the decedent's estate was insolvent.
The contention on behalf of the insured's children is that the proceeds of the National Service policy were exempt from claims of his creditors and that, consequently, his estate had no other interest in the policy than to serve as a conduit for the passing of the proceeds of the insurance to the children, free and clear of the claims of the decedent's creditors.
The learned auditing judge held that, since the estate of the insured was the beneficiary of the policy, the proceeds of the insurance were an asset of the estate and, as such, liable for the payment of administrative costs and expenses and claims of creditors of the decedent. The decree of distribution, which was entered accordingly, all but exhausted the balance for distribution, ...