by paula winters » Tue Aug 05, 2008 03:34 am
Two weeks ago my brother in law and sister were killed in a motorcycle accident. With my sister dead, my 17 yr old nephew was left as beneficiary. He turned 18 yrs old two days ago. There is no will that we can find and there is a niece that is over 18. Does the nephew get all that money without having to take care of the estate debts? Is the sister entitled to any of the insurance? Since she sprouted her wings after graduating and moved out the nephew seems to think that EVERYTHING is his and is banning her from the house, the property, the vehicles, and won't let her even see the mail. I have one heck of a mess.
Posted: Fri Aug 08, 2008 09:12 pm Post Subject:
Play fair with what?
The estate Gary...not the life policy. That's what I was referring to..when I said..However the daughter is still entitled to half the estate....whatever that may be...certainly an attorney needs to be hired for her if the boy isn't going to 'play fair' (IMO)...
Posted: Sat Aug 09, 2008 10:01 am Post Subject:
This thread in classic example of estate planning misconceptions and mistakes.
I'm switching sides now to point out the ignorance of men in general and the father in particular regarding estate planning.
This story could be re-titled "An Essay on How to Tear Your Family Apart When You Die"
The father in this story must have read the "Must Die in the Right Order Guide to Estate Planning." Naming the wife as the primary beneficiary is a usual and customary thing for married couples to do. Naming the son as the only contingent beneficiary and excluding the daughter is unusual but it's not uncommon for a parent who is fed up with an irresponsible child to disinherit them.
Pops in the story above never figured on dying too soon or people dying in the wrong order or the simultaneous death/common disaster.
He made the wrong assumptions. He didn't view his life insurance as a serious and integral part of his overall estate planning. Just wanted to provide "something" for the Mrs. when he dies first ..."X"... number of years from now and by that time his son would be all grown and daughter married living happily ever after.
The only reasonable assumption that can be made when doing estate planning/life insurance is that you are not going to wake up tomorrow morning. Now with that image burned into your mind.... What kind of a mess have you left for your children and loved ones if you DON'T WAKE UP TOMMORROW MORNING?
The above story could also be titled, "People Change When People Die" or "Life Happens While You're Making Other Plans"
Several posters above were all over the "boy" in this story to "do the right thing." The boy is doing EXACTLY what you would expect an 18 year old boy to do with his brand new power of a large sum of money.
Don't blame him.
BLAME POPS.
Although I will adamantly defend Pop's right to name anyone he desires as a beneficiary on his life policy and I will also adamantly defend the boy's right to keep every penny of the life insurance proceeds.... look at the destruction that money has had on his children and other family members.
Moving on....many people wrongly think that a Last Will & Testament is the ALL POWERFULL document that is the FINAL WORD as to what happens when a person dies as if it is an edict from GOD.
A person's Last Will & Testament ONLY controls the property, (i.e. real estate, stocks, bonds mutual funds, bank accounts, CDs, savings, checking, money market accounts, cars, boats, planes, trains and motorcylces, etc.) in which the deceased person was the SOLE INDIVIDUAL OWNER.
It doesn't control, CONTRACTS nor does it control jointly owned property.
Had Pops above had a Last Will & Testament, and if the will said to split EVERYTHING between the two children, the life insurance policy still would have went to the boy by way of contract beneficiary designation.
For you married couples who may read this thread and think you are all set because you own EVERYTHING jointly with your spouse so you have escaped probate court...not so fast.
The dirty little lawyer secret (also known as fraud by omission) is that all the probate court problems and federal estate tax problems manifest themselves when, THE SECOND SPOUSE DIES.
Joint Ownership with a spouse or anyone else will eventually become Individual Sole Ownership and that form of ownership always triggers probate court upon death. With or Without a will.
Posted: Thu Aug 14, 2008 07:09 pm Post Subject: Life Insurance policy
The nephew hounded the funeral home until they finally delivered the death certificates to him (and only him). Since he didn't share the death certificates I inquired about the time of death and was told that they died approximatley an hour apart with the brother in law expiring first. After discussing this with the family I was advised to call B-I-L job to inquiring about what the policy said as far as if there was a clause. I did so and was told that since my sister wasn't available to "claim" the money then it would go to the son. Case Closed!!
I get a call today from B-I-L job that informs me that since B-I-L expired first then my sister was entitled to the death benefit since she was still alive. Since she died an hour later then it will go to the estate.
NOW these kids have some money to pay off prexisting debts and hopefully their life can go on as normal as possible. A huge load has been lifted off my chest wondering how in the world these kids were going to "create" money for the many bills that the parents had before their death.
Posted: Fri Aug 15, 2008 12:31 am Post Subject:
Oh PJ, I sure hope this starts the turn around....for you and the kids...course nephew is gonna' be plenty ticked off isn't he? I feel so bad for the 'adults' in the family....the boy is just too immature to handle that much responsiblity...ten years (or maybe 20) he would feel much differently about it (I hope)...let us know how it all shakes out and how you all are doing....your in my prayers.
Posted: Fri Aug 15, 2008 11:52 pm Post Subject:
I get a call today from B-I-L job that informs me that since B-I-L expired first then my sister was entitled to the death benefit since she was still alive. Since she died an hour later then it will go to the estate.
Dear Paula,
You obviously did not comprehend a single word I wrote in any of my previous posts.
Having the life insurance death benefit paid to your deceased sister's Estate is the absolute worst outcome.
That money will now be tied up in the Probate Court System for about 3 years and by the time the lawyers and creditors are finished there won't be any money left for anyone.
When life insurance benefits are paid to the Estate that money is treated just like any other probate asset and now instead of that money being EXEMPT from lawyers fees and creditor claims everyone is going to get paid and receive the benefit of your brother-in-law's life insurance EXCEPT his son which was his desire and intention.
This statement below highlights just how misinformed you are:
NOW these kids have some money to pay off preexisting debts and hopefully their life can go on as normal as possible. A huge load has been lifted off my chest wondering how in the world these kids were going to "create" money for the many bills that the parents had before their death.
They will get what's left three (3) years from now.
I hope you are happy with yourself because now ALL attorney fees, any auto loans, all the credit card debts the parents had, any liens, medical bills etc., will be paid out FIRST through the court system before these adult children will see one penny.
You have foolishly and ignorantly interfered with your brother-in-law's life insurance designation.
On behalf of all the probate practice attorneys keep up the good work! It will be three (3) years before this Estate is ever settled.
This post should be interpreted as being harsh. It's meant to be harsh. But the above circumstances are the harsh realities of life and death.
You should be ashamed of yourself for causing a valuable asset to be wasted away needlessly.
Please keep us informed of the forthcoming long and arduous Probate Court proceedings.
Posted: Sat Aug 16, 2008 10:55 am Post Subject:
Paula,
Since you have done such a good job at wasting your brother-in-law's life insurance benefit I thought I'd share with you just exactly what typical attorney fees are to probate an estate.
Below is Florida Statute 733.6171
(3) Compensation for ordinary services of attorneys in formal estate administration is presumed to be reasonable if based on the compensable value of the estate, which is the inventory value of the probate estate assets and the income earned by the estate during the administration as provided in the following schedule:
(a) One thousand five hundred dollars for estates having a value of $40,000 or less.
(b) An additional $750 for estates having a value of more than $40,000 and not exceeding $70,000.
(c) An additional $750 for estates having a value of more than $70,000 and not exceeding $100,000.
(d) For estates having a value in excess of $100,000, at the rate of 3 percent on the next $900,000.
(e) At the rate of 2.5 percent for all above $1 million and not exceeding $3 million.
(f) At the rate of 2 percent for all above $3 million and not exceeding $5 million.
(g) At the rate of 1.5 percent for all above $5 million and not exceeding $10 million.
(h) At the rate of 1 percent for all above $10 million.
And to pour salt in the estate shrinkage wound Florida Statute 222.13 states:
(1) Whenever any person residing in the state shall die leaving insurance on his or her life, the said insurance shall inure exclusively to the benefit of the person for whose use and benefit such insurance is designated in the policy, and the proceeds thereof shall be exempt from the claims of creditors of the insured unless the insurance policy or a valid assignment thereof provides otherwise.
Notwithstanding the foregoing, whenever the insurance, by designation or otherwise, is payable to the insured or to the insured's estate or to his or her executors, administrators, or assigns, the insurance proceeds shall become a part of the insured's estate for all purposes and shall be administered by the personal representative of the estate of the insured in accordance with the probate laws of the state in like manner as other assets of the insured's estate.
So, just for easy numbers, if your brother-in-law had a $300,000 life insurance policy BECAUSE that money is now part of the Probate Estate the attorney will receive an additional $9,000 in lawyer fees plus costs and expenses.
The personal representative of the estate is also entitled to compensation at the rate of 3%.
That's ANOTHER $9,000 gone....needlessly.
Wow! :shock: $18,000 simply gone and that's before everybody else.
Is THAT what your brother-in law wanted for his son?
Posted: Sun Aug 24, 2008 09:28 am Post Subject:
While Paula Winters' niece and nephew have to sort things out, there are lessons for us to learn from this incident.
Say if a couple have 2 adults children who are not in talking terms, there are considerations to be made when proposing insurance plans for the couple.
The couple, just like most parents, obviously do not wish the relationship of their children gets worse when they are not longer around. Disputes amongst siblings always happen when deciding who is to get what over their parents' estate.
Improper planning may aggravate the situation further especially when the children are eyeing for immovable properties such land or houses.
Let's hear how would you propose insurance plan or estate planning to the couple.
Posted: Sun Aug 24, 2008 09:56 am Post Subject:
In this particular case, sounds like Dad was somewhat unapproachable, based on the only information we have which is from our OP the aunt.
I will tell you what we have done, regarding property with our children...we own a home and two recreational farms...used primarly for hunting...the boy gets the farms, the girl gets the house...they both know it and both are happy with that arrangement...the girl probably couldn't find either one of the farms if she had to, and the boy spends a lot of time on both with his dad...and hunts alot, the girl well she's a vegetarian...so there you go....all 401k's life insurance etc..is 50/50...when we were young and bought life policys and not sure how our family would grow, we added to all in the beneficary, (some might still say this), 'children of this marriage share and share alike'.
Posted: Sun Aug 24, 2008 11:15 am Post Subject: accident
First of all, PAULA...........I am SOOO sorry to hear about the death of your family members. As I read the entire thread, on this, it seems like such a 'family greed' thing. LORI has given you some really good advice and (..in my opionion, anyway) has been 'neutral' through the entire discussion. What I see?.......is a family torn apart because of money. Who gets what and how much.Family should stick together in issues like this...not go at each others's throats. Not to be morbid, but........reading cases like these should give the rest of us some kind of 'red flag' on what might happen if we are not prepared. I hope things are 'working out' a bit smoothly, concerning the insurance issues. Again, PAULA, I'm very sorry to hear of this.
Posted: Wed Sep 10, 2008 05:43 am Post Subject:
I'm with Gary 100% on this one. As you all know, I run into these cases on a fairly regular basis and most of the time the outcomes suck.
However, I have an suspicious inkling inside of me that says the son is spending money that isn't all his. His feeble mind has probably ruled "poop on her. If I spend it all, they can't take it away from me."
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