by Guest » Sat Jul 31, 2010 11:18 pm
My 35 year old brother passed away unexpectedly and left his nine year old son behind. At the time of death he had full custody of his son because the biological mother has a serious drug problem. Upon death, custody reverts back to the biological mother.
He was married for less than a year to his new wife who was listed as the primary beneficiary on his life insurance. I am listed as the "second benefactor" on the policy and before he was married I was listed as primary for about 5 years. My brother and I at that time had a verbal agreement that all of the proceeds would be used for my nephew and disbursed throughout his life as needed, (college, car , wedding ETC.) I have recently learned that the new wife has no plans of leaving my nephew any of the life insurance proceeds and also has no interest in maintaining a relationship with my nephew. In fact my nephew went over to the house "his father's house after the funeral and she asked him if she should box up his things for him and she would not let him take any sentimental belongings of his fathers.
My question is how do I contest this life insurance payout and what are my chances of winning?
He was married for less than a year to his new wife who was listed as the primary beneficiary on his life insurance. I am listed as the "second benefactor" on the policy and before he was married I was listed as primary for about 5 years. My brother and I at that time had a verbal agreement that all of the proceeds would be used for my nephew and disbursed throughout his life as needed, (college, car , wedding ETC.) I have recently learned that the new wife has no plans of leaving my nephew any of the life insurance proceeds and also has no interest in maintaining a relationship with my nephew. In fact my nephew went over to the house "his father's house after the funeral and she asked him if she should box up his things for him and she would not let him take any sentimental belongings of his fathers.
My question is how do I contest this life insurance payout and what are my chances of winning?
Posted: Sun Aug 01, 2010 01:53 am Post Subject:
Answered to the same post in the "Auto Insurance" forum.
You cannot contest, and your chance of winning if you do is about 0.05% if that much.
Posted: Sun Aug 01, 2010 02:49 am Post Subject:
I think Max is giving you high hopes with a 0.05% chance of winning, as I'd suggest it's much lower.
I'm sorry for the loss of your brother (and now that I've said something nice, here comes the but part were I say something that might not be so nice). Your brothe however failed miserably to prepare for this situation. He'll go down as someone who is in good company, since many people mess this up big time.
A verbal agreement means nothing, his Will (if he had one) would mean nothing. He named his wife the beneficiary to his life insurance, so she gets the money, too bad so sad for the kid.
A verbal agreement, by the way, is a horrible way to go about things, no matter how dedicated you were to keeping your word.
Your brother should have established the creation of a testamentary trust in his Will (married or not married, the kid isn't hers, aways good to be safe rather than sorry). Then he should have named that trust as the beneficiary of his life insurance. He could have then named you the trustee, or his wife (perhaps not) or used a trust company that could act as trustee with instruction on dispursement of funds to the child.
This is the way it is usually done, and it works without much of a hitch most of the time.
To recap, he should have, but didn't. No going back, money is the ex wife's. The kid goes who knows where. Your house? That's very generous. There's no contesting the beneficiary. Wife needed to die before you would have received any money.
That's the way it works. What to take from all this? Make sure your estate planning is in order, or else there will be more people coming here asking these sorts of questions and we get to break more bad news to someone else. We do it a lot, so we're used to it, but it's always nice to reduce the number.
Posted: Sun Aug 01, 2010 11:55 pm Post Subject:
I think Max is giving you high hopes with a 0.05% chance of winning, as I'd suggest it's much lower.
I debated whether that was overly generous or not.
Posted: Mon Aug 02, 2010 02:25 am Post Subject:
We'll just blame it on how much you hate delivering bad news ;)
Posted: Mon Aug 02, 2010 11:30 am Post Subject: insurance
(Just a comment..) I don't think "delivering bad news" is a horrible thing. However....I DO think it DOES mean something on HOW you deliver that bad news. Again..'money makes the world go around', and people start seeing the greediness in family members when Life Insurance come into play. I think it's horrible. I agree...you can't do anything 'after the fact.'
Posted: Mon Aug 02, 2010 11:49 am Post Subject:
A trust co. could have been the best option for the insured. That way the child could have expected a fair share of the returns. A trust as a beneficiary is truly helpful these days.
Posted: Mon Aug 02, 2010 11:56 am Post Subject: insurance
On my SGLI, I have a Trust for my son. Right now, he's a minor (17 years old). Would like to know....even if he is an 'adult', can I STILL have a Trust for him? I mean, if I wanted so much money to go into the Trust, where he can't touch it, until he's a certain age? I'm not trying to say this in a 'negative' manner. Just to 'space' the money out. Any suggestions on what I can do?
Posted: Mon Aug 02, 2010 02:27 pm Post Subject:
if I wanted so much money to go into the Trust, where he can't touch it, until he's a certain age?
You can establish a private trust with any criteria for dispensing the assets as you please. Don't want your son to have any money if he never puts flowers on your grave? So be it. Don't want your son to have access to the funds before age 50? Not a problem. Want to revoke it entirely before you die? Unless an irrevocable trust, you can do that, too.
Normally, these kinds of trusts stand up to the scrutiny of the courts. But some courts have invalidated them based on a showing or belief that the trustor was not of sound mind at the time the trust was created.
I was just rereading the whole business of Leona Helmsley and her failure to include two of her children as benefactors of some of her wealth after her death, and how she originally left $12,000,000 to Trouble, her obnoxious little Maltese terrier. Caused a terrible brouhaha, and the caretaker of the dog admitted that, in addition to his $60,000/year fee for looking after Trouble, it would probably only take about $235,000 to provide comfortably for the remainder of Trouble's life. And the court knocked down the original bequest, and also gave the two excluded children a major chunk of the money that had originally been earmarked for the dog.
There are also Uniform Gift/Transfer to Minors laws that operate in every state (one or the other -- UGMA or UTMA). The UGMA requires that ownership of the gifted assets automatically passes to the child at the age of majority. The donor/custodian of the UTMA may designate an age up to 25 as the point in time the transfer will occur. Once gifted to one of these trust accounts, the gift cannot be revoked and the timing of the transfer cannot be altered.
Posted: Mon Aug 02, 2010 04:58 pm Post Subject: Sad but true
My heart goes out to the poor kid. I wish reigns of his future was in far more capable hands. Now you can help him through your own resources if he is not really benefited.
Posted: Tue Aug 03, 2010 02:06 pm Post Subject:
And the court knocked down the original bequest, and also gave the two excluded children a major chunk of the money that had originally been earmarked for the dog.
So, there's a ray of hope for many of us who're under similar circumstances. Max, it's a pity when we can't help children. I'm not aware of the reason why Leona Helmsley couldn't add her children as benefactors. See, if you can share it with us over here.
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