Insurance Company Made Check Out to Wrong Person?

rickdees

New Member
1
So my dad died and left a mess. He left his life insurance in the ex-wife's name. My sister was the one who called the insurance company first, and she says they told her nobody but the ex-wife was on the policy. I called and the insurance company told me that as long as we provided proof of divorce, that the beneficiary designation would be removed and that the money would have to go through probate. I was told by a different person at the insurance company that this was something mandated by state law.

We received a check today, but it was written to my sister only. This is problematic as she became disabled from a rare disease and collects ssi. SSI will basically take it all as they suspend benefits until you spend down your assets to 2k. She cannot gift it, and there are restrictions on what she can spend it on. She also is named executor because my father never updated his will, which is a burden on her, but she's capable of doing it with help.

There are other complications; We are expecting medicaid estate recovery to be sending us a bill soon. My understanding is that we likely will receive a deferral for that based on my sister's disability, but we're in limbo about that. If medicaid CAN collect from the estate, we don't want the insurance money included in the estate, and spending it down will have to do. As the check is currently written, at least we can spend it down and get something out of it. But if we succeed with medicaid, we really want that check in the estate so my siblings and I can receive our share.

I can't for the life of me understand why the insurance company issued it only to my sister. Is there some other explanation? I know people will say to call the insurance company and ask. But I want to wait until the medicaid situation is clarified, I don't want to them reissue the check until I know if this error is in our best interests or not.

Will I be able to get them to reissue the check to the estate? Is this simply an error on their part, or am I missing something?
 
Sounds like a mess.

Was your dad covered by medicaid as well? I'm not clear on why the estate recovery portion of your explanation, unless your dad received medicaid.
 
So my dad died and left a mess. He left his life insurance in the ex-wife's name. My sister was the one who called the insurance company first, and she says they told her nobody but the ex-wife was on the policy. I called and the insurance company told me that as long as we provided proof of divorce, that the beneficiary designation would be removed and that the money would have to go through probate. I was told by a different person at the insurance company that this was something mandated by state law.

We received a check today, but it was written to my sister only. This is problematic as she became disabled from a rare disease and collects ssi. SSI will basically take it all as they suspend benefits until you spend down your assets to 2k. She cannot gift it, and there are restrictions on what she can spend it on. She also is named executor because my father never updated his will, which is a burden on her, but she's capable of doing it with help.

There are other complications; We are expecting medicaid estate recovery to be sending us a bill soon. My understanding is that we likely will receive a deferral for that based on my sister's disability, but we're in limbo about that. If medicaid CAN collect from the estate, we don't want the insurance money included in the estate, and spending it down will have to do. As the check is currently written, at least we can spend it down and get something out of it. But if we succeed with medicaid, we really want that check in the estate so my siblings and I can receive our share.

I can't for the life of me understand why the insurance company issued it only to my sister. Is there some other explanation? I know people will say to call the insurance company and ask. But I want to wait until the medicaid situation is clarified, I don't want to them reissue the check until I know if this error is in our best interests or not.

Will I be able to get them to reissue the check to the estate? Is this simply an error on their part, or am I missing something?

You need to call the insurance company and ask them. They aren't going to issue a new check just because you called and asked. You are going to get more accurate answers there than asking a bunch of people who don't have that information on an internet forum.

If your mother was on Medicaid and they run the check through her estate it will likely all go to Medicaid unless it's needed to pay a funeral bill. Believe it or not funeral bills have to be paid before any other creditor of an estate including the IRS. Funeral Directors have a strong lobby.

If your sister received the check and she is on Medicaid, to my knowledge (I'm no lawyer) Medicaid takes a snapshot of your sister's financial at the first of every month. She can have a million dollars on days 2-30 but the first of every month she has to be under $2,000 or she will be disqualified. So if she inherits $25,000 today and she spends it all before the 1st of next month on personal items that she can use (car, home repairs, furnature, clothes, vacation, etc.) Medicaid should be fine with it. Again, I am not an attorney so this is just my layman understanding. If it's very much money at all I would be calling an elder law attorney that is well versed in Medcaid in your state.
 
Back
Top