Question about life insurance beneficiary precedence

[Advent]

My mother, who is the stated beneficiary of my father's life insurance policy, passed away over 20 years ago, and my father, who remarried after her death, passed away a few months ago. After my father died, his life insurance company (private) contacted me for help in contacting my mother, and I informed them that my mother already predeceased my father. They want me to submit death certificates for both my mother and my father in order to expedite the policy's proceeds. The life insurance company, on the first couple of calls, would not tell me if the policy has any listed contingency beneficiaries (such as me and my siblings), saying that they could only determine that after reviewing the policy once the needed documents are submitted. However, their order of precedence for proceeds is the following: 1) the living spouse of the insured; 2) children of the living spouse; 3) etc

Today, I contacted them after they again contacted me concerning receiving the documents (which I have yet not submitted). The representative told me she didn't see any listed contingency beneficiaries for the policy, which contrasts with what earlier reps told me, since they had to research the matter. (Could she be wrong?)

Do I understand this correctly: my father's widow, who had nothing to do with the policy's stated beneficiary (my mother) would then receive the policy's proceeds instead of me and my siblings (their children)? Is there a way to legally challenge this, because had my father passed away before he remarried, we, his children would have been the beneficiaries. What incentive does the insurance company think I have to submit documents that would only serve to expedite our father's living spouse in receiving the policy's proceeds?

 

[DHK]

First, life insurance beneficiary designations are private, so you got standard answers regarding contingent beneficiaries. Unless you have a legal right to that information, they won't tell you (and you need to submit the required and requested documentation).

If there is no contingent beneficiary, then the benefits would be included in your father's estate to be distributed according to his will OR through probate... which may favor your father's widow over that of his children.

You can try to legally challenge this through the probate court... but good luck.

What incentive does the insurance company think I have to submit documents that would only serve to expedite our father's living spouse in receiving the policy's proceeds?

Are you the executor of the estate?
If so, don't you have a LEGAL responsibility to fulfill that duty - regardless of how you feel?
If so... grow up and get it done.

 

[Tahoe Ray]

I agree with DHK that you should just get it done and let the chips fall where they may. If you're the executor, then the beneficiaries can sue you for not acting in good faith.

That being said, you may be able to recoup a small % of the money lost (if you're truly not entitled to it). Assuming you're the executor: What type of compensation is an executor entitled to? - Law Offices of John W. Callinan

And to anyone else reading this: update your beneficiaries!

If you're an agent, this is also one of the easiest ways to touch base with a client (a "bene check"). You'd be surprised how many people need additional coverage or will refer you on these basic calls alone.

 

[WinoBlues]

If you're an agent, this is also one of the easiest ways to touch base with a client (a "bene check"). You'd be surprised how many people need additional coverage or will refer you on these basic calls alone.

Hey, Hey, Heeey!

That's a secret. Unless you pay for a lead it is no good. Servicing clients is a waste of time.

 

[WinoBlues]

@Advent

As the others have said just do it. It cost you nothing to do. What would your father want?

Lastly, the state you are in may dictate the outcome as well.

 

[Allen Trent]

If you're the executor, then the beneficiaries can sue you for not acting in good faith.

Unless there was no beneficiary named or the "Estate" named, he as the executor would have no responsibilities to the beneficiaries of the life policy. The excector only has a responsibility to estate assets, not assets that pass by joint ownership or beneficiary designation. The insurance carrier has the responsibilities to the policy named beneficiaries.

If this goes to probate, creditors get paid first. Then by will or intestate laws in the state

 

[Tahoe Ray]

Unless there was no beneficiary named or the "Estate" named, he as the executor would have no responsibilities to the beneficiaries of the life policy. The excector only has a responsibility to estate assets, not assets that pass by joint ownership or beneficiary designation. The insurance carrier has the responsibilities to the policy named beneficiaries.

If this goes to probate, creditors get paid first. Then by will or intestate laws in the state

Beneficiaries of the estate, not the policy.

Apologies...I should have been more clear.

 

[Advent]

First, life insurance beneficiary designations are private, so you got standard answers regarding contingent beneficiaries. Unless you have a legal right to that information, they won't tell you (and you need to submit the required and requested documentation).

If there is no contingent beneficiary, then the benefits would be included in your father's estate to be distributed according to his will OR through probate... which may favor your father's widow over that of his children.

You can try to legally challenge this through the probate court... but good luck.




Are you the executor of the estate?
If so, don't you have a LEGAL responsibility to fulfill that duty - regardless of how you feel?
If so... grow up and get it done.

No, I am not the executor of the estate. In fact, there turned out to be no will at all, and no probate that can be gone through. My father developed dementia in the last five years, his wife cut off most communication with us, his kids, and worked with an unethical estate attorney (nominally working for my father) to have the property transferred with her being named as a co-owner, avoiding all probate. What we believe happened is that she probably found a will in his desk, and simply threw it away. Probably under the attorney's advice, for the last few years, she avoided having our father undergo a medical exam that would have found him legally incompetent due to dementia. He was finally diagnosed as having advanced Alzheimer's -- only three weeks before he died . The estate attorney, alone among everyone in the entire world, claims that our father seemed "perfectly fine" for the past several years. After all this is said and done, I am considering filing an ethics complaint against this attorney, but am unsure how to go about it.

We also discovered that, with our ill father as then-trustee signing checks, and, of course, with his estate attorney's knowledge, the wife was using our (the kids') trust fund as a slush fund, seriously depleting it. And because my father unwisely, at the time he remarried, made his wife a future co-trustee (but not a beneficiary), we are now locked in a battle to have her removed as co-trustee, since my oldest sibling was supposed to be the only real trustee. Plus, we, the trust beneficiaries, are now faced with a huge tax bill a few months from now, since no taxes were ever paid on it previously -- a trust that hasn't been able to be drawn down and disbursed to the intended beneficiaries because my father's widow is using her co-trustee power, again with the estate attorney's guidance (who is now officially her, and no longer my father's, estate attorney), to prevent that from happening.

I received the life insurance inquiry regarding my late mother a couple of month's ago (they said they located me by doing an internet search for close relatives). What at first seemed like a pleasant surprise in the middle of all this turmoil now is a gut-punch -- I can submit the documents and only watch as the entire proceeds for a policy paid by my father for the sake of my mother would go to my father's widow who has ripped us off.

Oh, and top of all that, we were unable to bury our own father; we found out about his death the day after he died this past fall only because his estate attorney contacted my brother's attorney to let us know (we are completely estranged from our father's wife), We think our dad's wife had him cremated, but we don't know for sure, and probably will never know.

 

[Allen Trent]

No, I am not the executor of the estate. In fact, there turned out to be no will at all, and no probate that can be gone through. My father developed dementia in the last five years, his wife cut off most communication with us, his kids, and worked with an unethical estate attorney (nominally working for my father) to have the property transferred with her being named as a co-owner, avoiding all probate. What we believe happened is that she probably found a will in his desk, and simply threw it away. Probably under the attorney's advice, for the last few years, she avoided having our father undergo a medical exam that would have found him legally incompetent due to dementia. He was finally diagnosed as having advanced Alzheimer's -- only three weeks before he died . The estate attorney, alone among everyone in the entire world, claims that our father seemed "perfectly fine" for the past several years. After all this is said and done, I am considering filing an ethics complaint against this attorney, but am unsure how to go about it.

We also discovered that, with our ill father as then-trustee signing checks, and, of course, with his estate attorney's knowledge, the wife was using our (the kids') trust fund as a slush fund, seriously depleting it. And because my father unwisely, at the time he remarried, made his wife a future co-trustee (but not a beneficiary), we are now locked in a battle to have her removed as co-trustee, since my oldest sibling was supposed to be the only real trustee. Plus, we, the trust beneficiaries, are now faced with a huge tax bill a few months from now, since no taxes were ever paid on it previously -- a trust that hasn't been able to be drawn down and disbursed to the intended beneficiaries because my father's widow is using her co-trustee power, again with the estate attorney's guidance (who is now officially her, and no longer my father's, estate attorney), to prevent that from happening.

I received the life insurance inquiry regarding my late mother a couple of month's ago (they said they located me by doing an internet search for close relatives). What at first seemed like a pleasant surprise in the middle of all this turmoil now is a gut-punch -- I can submit the documents and only watch as the entire proceeds for a policy paid by my father for the sake of my mother would go to my father's widow who has ripped us off.

Oh, and top of all that, we were unable to bury our own father; we found out about his death the day after he died this past fall only because his estate attorney contacted my brother's attorney to let us know (we are completely estranged from our father's wife), We think our dad's wife had him cremated, but we don't know for sure, and probably will never know.

Wow. Sorry to hear all that.

Hopefully you are consulting with a lawyer of some sort as a couple items don't make clear sense to me based on what you are staying

No probate case: that isn't for certain yet as you don't know if the life insurance will be paid to a named beneficiary or his estate for 100% certainty.

You say you as a trust bene are faced with a big tax bill in a few months. Why do you say that? Most trust assets distributed don't come with a tax bill. Bank monies were taxed each year, so no tax bill for years of growth. Capital assets such as a house or after tax mutual funds, stocks, bonds get a step up in basis to be valued as what the share price was the day he died, so no big capital gains tax bill from years of growth. The only items that come with tax bills normally are retirement accounts & annuities, but those have options usually to spread the tax out over 5 -10 years if the trust is a qualifying trust for look through to bene. Even if a tax bill is due for an annuity or retirement acct processed as lump sum claim to the trust, the trustee is required to file final trust tax returns & pay all bills before closing trust & paying trust bene their share of final assets.

This is all too common. Begging my sister to see an attorney now to get a QTIP trust to try to protect against this exact thing where potentially assets given to her from our parents end up in her step kids names in 20-30 years instead of her kids. It can happen intentionally like in your case or accidentally in many cases by the spouse with money dying first & money goes to spouse & then their kids, not kids of the 1st that died

 

[Advent]

Wow. Sorry to hear all that.

Hopefully you are consulting with a lawyer of some sort as a couple items don't make clear sense to me based on what you are staying

No probate case: that isn't for certain yet as you don't know if the life insurance will be paid to a named beneficiary or his estate for 100% certainty.

You say you as a trust bene are faced with a big tax bill in a few months. Why do you say that? Most trust assets distributed don't come with a tax bill. Bank monies were taxed each year, so no tax bill for years of growth. Capital assets such as a house or after tax mutual funds, stocks, bonds get a step up in basis to be valued as what the share price was the day he died, so no big capital gains tax bill from years of growth. The only items that come with tax bills normally are retirement accounts & annuities, but those have options usually to spread the tax out over 5 -10 years if the trust is a qualifying trust for look through to bene. Even if a tax bill is due for an annuity or retirement acct processed as lump sum claim to the trust, the trustee is required to file final trust tax returns & pay all bills before closing trust & paying trust bene their share of final assets.

This is all too common. Begging my sister to see an attorney now to get a QTIP trust to try to protect against this exact thing where potentially assets given to her from our parents end up in her step kids names in 20-30 years instead of her kids. It can happen intentionally like in your case or accidentally in many cases by the spouse with money dying first & money goes to spouse & then their kids, not kids of the 1st that died

It's a generation skipping trust that was set up by my grandparents with my dad. According to our own estate lawyer advising us, because there was apparently no GST exemption written into the trust, a 40% tax is due, based on the value of the trust at the date my father died.

On the probate: in the absence of an officially-filed will, my father's estate (not including the life insurance policy) had already been entirely transferred to his widow prior to his death by making her a co-owner on pretty everything he owned (house, bank accounts, etc.). Therefore, she and her estate attorney are able to avoid probate, at least on those things not including the life insurance policy. The life insurance policy is a separate thing, and so far, the insurance company has only been contacting me about it. They told me that the usual order of precedence, if there is no listed contingent beneficiaries, would be 1) living spouse; then 2) any surviving children, 3) parents (who are deceased); 4) estate. However, the lawyer advising us has said that my father's widow would have to file some estate paperwork to receive any proceeds from this policy, so perhaps a probate might be involved (I'm guessing). I'm hoping that my siblings and I were listed as contingency beneficiaries (assuming the last rep I spoke to was wrong about that), but I guess the only way to find out for sure is if we went ahead and filed a claim. At the moment, our estate attorney has been concentrating exclusively on the trust issue, with the life insurance policy a newer thing I told them about after I was contacted by the company.