The distribution amplifies a dispute in Utah between the couple's quarreling families about who should be trustees and beneficiaries for Susan Powell's conservatorship and a related trust.
TheWashington judge ordered a split of two New York Life policies one on Josh Powell, valued at more than $1 million; and a rider covering the Powell's sons, Charlie and Braden Powell, valued at more than $500,000 with half going to the Powell beneficiaries and the other half going to Susan Powell's conservatorship.
The conservatorship will receive all of another $500,000 policy on Josh Powell.
A $1 million policy on Susan Powell will go to a trust holding her and Josh Powell's assets.
Josh Powell killed his two sons, Charlie and Braden, and himself in a fire in Graham, Wash., in 2012. Josh Powell also was the only person of interest in the disappearance of Susan Powell. She was last seen Dec. 6, 2009, at her West Valley City home.
The Cox family fought the even distribution of a policy for Charlie and Braden. The Coxes argued that Washington law prevents killers and abusers from collecting life insurance proceeds from their crimes, and that law should be applied to Josh Powell's beneficiaries.
But Leighton wrote that was too broad an interpretation of the law and the prohibition only applies to the killer.
"Neither Joshua nor his estate will be unjustly enriched if his one-half interest in the rider proceeds is distributed according to the terms of the policy," Leighton wrote.
Anne Bremner, an attorney for the Coxes, said the judge's strict interpretation failed to take into account the twists and turns of Susan Powell's disappearance, including how her husband changed his beneficiaries after she vanished.
"It's our position," Bremner said, there's really no case like the Susan Cox Powell case."
Bremner said the Coxes are unlikely to appeal Leighton's decision and will focus on the Utah case.
In state court in Salt Lake City, the Powells and Coxes have been arguing about the conservatorship and trust holding assets belonging to Josh and Susan assets that now include $2.55 million in life insurance money. The Coxes are the trustees and beneficiaries of the conservatorship and the trust.
However, Terrica and Alina Powell Josh's mother and sister, respectively contend the terms of those agencies were illegally changed to remove them as trustees or beneficiaries.
Joshua Lee, a lawyer for the three Powells, said Monday that a motion is pending in state court in Salt Lake City to restore his clients as beneficiaries or trustees.
Tom West, a Tacoma attorney who represented members of the Powell family in the federal case, said he has argued that the two sides of the family should split the proceeds and assets equally.
"They all lost the family members they loved very much," West said.
Attorneys for the Powells in recent weeks have taken pains to point out that Josh Powell's father, Steve Powell, is not a party in the litigation and does not stand to receive any money. Steve Powell was convicted in 2012 of 14 counts of voyeurism for photographing neighbor girls in various states of undress.
Bremner said she has not seen anything in writing that relinquishes Steve Powell's claims to any of the money. Bremner also represents the family of the girls Steve Powell photographed. They received a $2 million judgment against Steve Powell and recently took possession of his home in Puyallup, Wash.
How the insurance money is to be split
• Josh Powell's New York Life policy, valued at $1,057,863.01 plus interest:
Susan Powell conservatorship: 50 percent
Michael Powell's estate*: 46.5 percent
Alina Powell: 2 percent
John Powell: 1.5 percent
• New York Life rider covering Charlie and Braden Powell, valued at $528,931.50 plus interest
Conservatorship: 50 percent
Michael Powell estate*: 50 percent
• Susan Powell's New York Life policy, valued at $1 million plus interest
All the money will go to a trust holding Susan and Josh Powell's assets, currently controlled by the Cox family.
• Josh Powell's Beneficial Life Policy, valued at $500,000 plus interest
All the money will go to the conservatorship.
Source: Ruling by federal Judge Ronald Leighton
*Michael Powell died in 2013.