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Under California law, siblings do not have standing to bring a claim for wrongful death, only a spouse or children of the decedent or another dependent minor, stepchildren or parents. The decedent's personal representative can bring a claim but only on behalf of the people who have standing. So I am confused as to whom the driver's insurance company settled with. But whoever they settled the claim with is who will recover those funds. It is not a matter of trumping a will. The will states where his possessions/assets go after he dies. He can not will the settlement proceeds of a potential wrongful death lawsuit that happens after he is dead. It is sort of like life insurance - it goes to the named beneficiary, regardless what the will says about bequeathing other assets.
Again, the only ones with standing to sue for wrongful death are the spouse, children, and sometimes the parents and other dependents, such as minors and stepchildren. The insurance company must believe that as the administrators of the estate, you have standing to sue on behalf of the estate, when in reality, you do not. In any event, the siblings have no standing to sue. The insurance representative does not seem to know what he is doing. I would lock that settlement down as fast as possible.