Who is the actual beneficiary of your annuities?

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PostPosted: Tue Jul 05, 2011 4:19 pm   Post subject: Annuity  

Here is an update to my previous post's on my Hartford annuity. As you know I was named a beneficiary by my mother along with my brother on her Hartford Annuity. My brother continues to refuse to send in his signed forms to Hartford so Hartford will not pay me my share of the annuity (50%). My brother continues to state that her should receive all the money, it was my mothers wish.

At your (and my attorney's) suggestion I sent a registered letter to Alan J. Kreczko, Executive Vice President and General Counsel at Hartford, I have received no response. I continue phone conversations with Hartford requesting what action thay are going to take. Last week I was told that they were considering the interpleader action. I asked the Hartford manager how that process was initiated and he told me I had to start that process!!! I know from talkiing with my attorney that is incorrect. Just an example of the run around I get from Hartford.

I am frustrated.............. any suggestions? I would like to avoid going to court but I can't even get that initiated!


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PostPosted: Tue Jul 05, 2011 8:05 pm   Post subject:   

If you have an attorney, you should let him handle this by writing the appropriate "lawyer letter" that is supposed to get someone's attention.



I assume that a probate case has been opened, and would allow The Hartford to file its interpleader and deposit the money for the court to distribute. In the meantime, every day of delay is another bit of interest added to the account.



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PostPosted: Wed Jul 13, 2011 12:28 am   Post subject: Annuity  

Here is another update; Hartford's attorney called me today and told me Hartford is going the interpleader route. He stated i will receive a letter in the mail in 7-10 days stating the other beneficiaries position (my brother) and stating my position. I asked the attorney "what is my position"? He said he didn't know because he has not reviewed the case yet.



As I stated to the Hartford attorney I can't believe this is going to court. The agent has sent a letter to Hartford stating my mother was of sound mind when she signed the beneficiary change form in Febuary of 2009. He also stated that he gave her the wrong beneficiary change form (MONY form) and called her the next day telling her that. He said he would send her the correct form. My mother said " send ALL the forms back to me, i want to think about it. My mother then put them in her lock box and my brother found them (two copies and the original) after her death in February 2011. My brother has an attorney and apparently there is enough to cause Hartford to had it over to the courts.



I am meeting with my attorney next week, I feel like a victim, worse yet I feel like I have done something wrong.



From what I have read about beneficiary changes after some one is dead it seems like my brother does not have much of a case here. I am surprised he found an attorney to take his case.



Am I missing something here? Will those forms filled out in 2009 and found im my mothers lockbox after her death carry any weight in a court of law?



Again, thank you for your timely and informative responses.



G


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PostPosted: Wed Jul 13, 2011 3:55 am   Post subject:   

Quote:
He stated i will receive a letter in the mail in 7-10 days stating the other beneficiaries position (my brother) and stating my position. I asked the attorney "what is my position"?




Your position is whatever you communicated in your letter to The Hartford. Probably that you believe you are entitled to 50% of the policy proceeds and that your brother is entitled to the other half.



The interpleader is nothing special. It is the procedure the insurance company takes to end its responsibilities to the contract and beneficiaries. By turning over the money to the court, the insurance company fulfills its promise to your mother to pay the proceeds after her death.



Then it becomes an issue for the court to determine what should be done with the money. There's no guarantee that you will prevail in your quest for 50% of the proceeds, but hundreds of years of insurance practice and law are on your side. Insurance contracts clearly state that a revocable beneficiary will be changed/added/deleted upon submission of request in the form required by the insurance company DURING the lifetime of the policyowner and/or insured/annuitant. Unless the form was in transit at the time of death, it is generally impossible to invoke a change of beneficiary later.



Probate courts have a responsibility to dispose of a person's estate in the most equitable manner under the law. It must first satisfy direct claims against the decedent's estate: employees' wages, federal tax liabilities, state and local tax liabilities, claims of general creditors of the estate, named beneficiaries of a will, any other person with a claim against estate assets. If there is no will, then things become a bit more complex, as the probate court may want to look to others in the family tree beyond children (although it should not in your case). When there are no children, then the court starts looking for aunts and uncles (those related by blood not marriage), cousins, and so on down the line.



In an interpleader, the insurance money is exempt from the claims above. It is earmarked and protected from the claims of estate and/or beneficiary creditors. It is merely being held by the court until the disposition of that asset is determined. It will not become an asset of the estate. The court will either (1) divide the money 50-50 between you and your brother or (2) divide the money in some other ratio, or (3) give 100% of the money to you or your brother, without recourse by the party who received 0%. The most likely outcome is (1). If your brother doesn't like that, he can disclaim his share, and his portion will go to you.



You just want to know that your attorney is knowledgeable in insurance law as well as probate law. This is not an area for "generalists" or someone with little understanding or experience.



You might want to look up one of our forum members, Mark Colbert (aka InsInvestigator) and send him a "PM" regarding your situation. He may have more to add or advice to offer.


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PostPosted: Wed Jul 13, 2011 12:27 pm   Post subject:   

Max, wrong again.



As long as the insured is the owner of the policy, it is an asset of the estate.


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PostPosted: Wed Jul 13, 2011 6:07 pm   Post subject:   

You're wrong. This is an annuity and there is a named beneficiary (actually two beneficiaries), so it is not the property of the estate -- the proceeds are due to one or both beneficiaries.



There is a dispute between the beneficiaries as to the distribution amounts of the proceeds. The insurance company takes no sides and turns this matter and the money over to the court for disposition via the interpleader, ending its responsibilities to the contract. Because the beneficiaries cannot resolve this amicably, there are now attorneys involved, and they will (effectively) get a cut of the proceeds that only the beneficiaries should be entitled to.



If there was no named beneficiary, the situation would be very different. But that is not the case according to the original post.



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PostPosted: Thu Jul 14, 2011 3:34 am   Post subject: Annuity  

Another update! My brother called me this evening to discuss my Mother's annuity, he said his attorney directed him to do so. After two hours of discussion here is what I found out.

The agent of record has given a sworn statement (notarized) to my brothers attorney stating that my mother was of sound mind and signed the MONY beneficiary change form (with the Hartford contract number on it). He also states that he gave the original to his associate to be mailed to Hartford. It was never mailed.

My brother received a copy of the signed MONY change form and so did my mother (February 2009).

The agent has given me an ammendment to the statement he gave to my brothers attorney stating he mailed the original and two copies back to my Mother after he contacted her on the phone. He told her that he was mailing them back to her because they were on the wrong form and told her that she would need to fill out the Hartford form. The agent also states that at that time he asked my Mother if this was what she wanted, my Mother said let me think about it and that she would call him back. He states that my Mother never contacted him to let him know one way or the other.

My Brother is positive that My Mother wanted him to have ALL of the annuity money. He says it is the agents fault that this happened. And he should be awarded the funds in the Annuity.

I told him that the agent made an ammendment to the statement his attorney has and the agent states my Mother never followed through with him.

What a mess!!! My brother is pissed at me, he thinks I had something to do with this.

Knowing this information what are your thoughts on how this will play out in court (interpleader).

What should I do?



Thanks for you feedback.



G


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PostPosted: Thu Jul 14, 2011 10:04 am   Post subject:   

Quote:
You're wrong. This is an annuity and there is a named beneficiary (actually two beneficiaries), so it is not the property of the estate -- the proceeds are due to one or both beneficiaries
.





Max, you are consistent in regard to posting incorrect information.



A named beneficiary allows an asset to get paid directly to that beneficiary and avoid probate. However, it is still an asset of the estate when the owner dies.



Ex. Max dies with his only asset being a $10,000,000 life insurance policy on his life with his mom as beneficiary. The insurance company will pay the money to his mom. That does not change the fact that the value of his estate will be $10,000,000 and estate taxes will be due.

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PostPosted: Thu Jul 14, 2011 2:31 pm   Post subject:   

You know, you constantly argue over meaningless things. And here, you inconveniently change the subject.



Quote:
That does not change the fact that the value of his estate will be $10,000,000 and estate taxes will be due.




There was no discussion here of ESTATE TAXES until you brought it up. The annuity proceeds in this discussion are NOT part of the estate, because two beneficiaries were named and existed at the time of the owner's death. I have no disagreement with your assertion that for estate tax purposes, the VALUE of the annuity is. But, as with many of your other posts, you fail to read and understand the question [and by your own admission, you don't answer questions], and as a result you make inappropriate remarks.



The matter of estate taxes has ABSOLUTELY NOTHING TO DO with the OP's question or any of the previously posted responses, each of which is accurate. You waste everyone's time with your BS interruption.



But it demonstrates that you apparently have no understanding of the issue. PROPERTY LAW is the only thing at issue here. The beneficiaries are in a dispute over whose property the annuity proceeds are. The insurance company is in the middle and, most appropriately, does not wish to be the arbiter of the dispute.



Because the matter is connected to the death of a person, the logical place for that decision to be rendered is in probate court. But it doesn't have to be decided there. Any court of "competent jurisdiction" can decide the matter, from Small Claims to the US Supreme Court. For the sake of time and expense, it would be more convenient for all parties involved not to take this matter as a separate issue to another courtroom.



Like life insurance, annuity proceeds payable to a named beneficiary become, at the very moment of the death of the owner, the property of the beneficiary and are payable upon "presentation of due proof of death". They, like life insurance proceeds, are protected against the claims of creditors--of either the decedent or the beneficiary--before the beneficiary has the money in hand.



Claims "at equity" of another person who believes they have a contractual interest (divided or undivided) in those proceeds (such as in the case of a collateral assignment, which is very different than the claim of a general creditor) are a different matter. And this is the reason the insurance company files its interpleader, because it does not want to be a party to the dispute.



The only issue here is the dispute over distribution of the proceeds. One of two beneficiaries believes he is entitled to as much as 100% of the proceeds based on a beneficiary change form discovered after the death of the annuity owner that (apparently) was not filed with the insurance company as required. It will be up to the court to decide if those documents are one beneficiary's proof of his claim or not. [[ For the record, I don't believe the court will uphold that claim, but I don't have all the facts here either, and something important may very well have been omitted. ]]



As a general business practice, the insurance company only pays money to whom it has listed as the beneficiary(ies). Because of the known dispute in this case, the insurer chooses not to pay any beneficiary until the claim forms are received from all (nothing truly improper about that, but some insurance companies simply pay the money and let others figure it out later). Because one refuses to submit the paperwork, the other cannot collect. Who makes the final determination? The court will if the beneficiaries cannot voluntarily agree.



If a probate action has already been opened, it can be decided in that court. It is not an action against the estate, but an action between persons with an interest in the estate. If there is no probate, it is simply a civil action (a claim for money/property) on the part of one beneficiary against the other. Either way, the insurance company has no reason to, and does not, involve itself in the dispute; it simply files the interpleader, together with a check for the proceeds payable to the court, and it's out of their hands and up to the court. When the court makes a final determination, it writes checks to the parties entitled to the money.


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PostPosted: Thu Jul 14, 2011 4:33 pm   Post subject:   

If it is $100 instead of $10,000,000, it still doesn't change anything. It is still part of his estate at death. No comments have been made claiming that it gets paid to the estate. Where the money gets paid is meaningless in that regard.



Max, I understand that what I'm talking about has nothing to do with answering the question. You might find it ok to post incorrect information if it doesn't impact the question. Personally, I believe that as a moderator, you have a responsibility to make sure that all of your information is correct.


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PostPosted: Thu Jul 14, 2011 5:03 pm   Post subject: Annuity  

And here is the last tidbits of information before we go to court. The agent will testify that the wrong forms were initially used to make a beneficiary change, my mother signed the forms and sent them to the agent. The agent then realized his mistake, called my mother and asked her if she wanted him to mail her the Hartford beneficiary change form, my mother said no, send ALL the forms back to me, the agent did that and my brother found the documents in her lockbox after her death, two copies and the original. My brother says the agent has the original, the agent says my brother has the original because he mailed it back. My question is; hows does this impact me as a beneficiary on the annuity contract? My brother still contends he should receive 100% of the annuity funds.

Hartford washed their hands and has taken the interpleader route (I don't blame them!).



One last comment. Max thanks for all your input, you have been very helpful. As for all the individuals who find fault with your statements " instead of attacking" Max it would be nice to if you brought additional information that would be useful and helpful to the person looking for guidance. Keep up the good work Max!


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PostPosted: Thu Jul 14, 2011 5:56 pm   Post subject:   

Quote:
you have a responsibility to make sure that all of your information is correct.




If you believe there is anything in this thread that is incorrect, identify it specifically.



Quote:
If it is $100 instead of $10,000,000, it still doesn't change anything. It is still part of his estate at death




You are completely mistaken, if you are asserting that the annuity proceeds are "PART OF HIS ESTATE". You are confusing property rights with estate valuation.



Because there are named beneficiaries, the annuity proceeds are NOT part of the corpus of the estate, the value of the proceeds are merely counted as part of the estate's value for tax purposes. The annuity proceeds became the protected PROPERTY of the beneficiaries or others with a "claim at equity" at the moment of death as clearly explained above. They are not payable to the estate. If they were, the beneficiaries might never see a penny of them.


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Last edited by MaxHerr on Thu Jul 14, 2011 6:21 pm
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PostPosted: Thu Jul 14, 2011 6:14 pm   Post subject:   

Quote:
My question is; hows does this impact me as a beneficiary on the annuity contract? My brother still contends he should receive 100% of the annuity funds.




This is really a matter of contract law. The annuity contract spells out the precise manner in which a beneficiary is changed. Common language in the contract might be similar to: "You may change the beneficiary at any time during the Annuitant's lifetime. A written request in a form acceptable to us must be made to our Home Office. We may require the policy to record the change. The request will take effect when signed, subject to any action we take before receiving it."



According to this, there is no change of beneficiary as far as the insurance company is concerned if they were never provided "a form acceptable to us". If the court interprets the contract according to contract law, there is no dispute . . . whatever is in the records of the insurance company determines the outcome.



If the court applies some different form of understanding, the signed forms could signal "intent" to change the beneficiary. But, then again, placing the forms in a lockbox and never sending them to the insurance company could be evidence of a "change of heart" and recission of earlier intent. Those forms are going to be dated, and the time lapse between now and then should demonstrate that the decedent had ample time to change her mind a third time in the interim but chose not to.



This will probably boil down to the argumentative skills and legal knowledge of the attorneys and the understanding of contract law on the part of the judge. I doubt that the court will award 100% of the proceeds to your brother, and will agree that the contract permits him to a 50% share as you contend. But judges do strange things and nothing is "for sure" until the decision is rendered.



The unfortunate thing about all this is that when money is involved, family members sometimes behave like total strangers, each vying for a bigger piece of the pie for themselves than for equity and amicability. Proper estate planning tends to overcome this.



(Dying broke might be a better solution! And the book "DIE BROKE" by Stephen Pollan may once again gain some respect, although it needs to be updated with contemporary numbers.)


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Last edited by MaxHerr on Thu Jul 14, 2011 6:27 pm
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PostPosted: Thu Jul 14, 2011 6:26 pm   Post subject:   

Quote:
the annuity proceeds are NOT part of the corpus of the estate, the value of the proceeds are merely counted as part of the estate's value for tax purposes.




Whether we're talking about annuities or life insurance, ever wonder why estate assets have to be sold to pay estate taxes?



It is precisely because the insurance proceeds, when paid to a named beneficiary, are not available to the estate to use to pay taxes. THE PROCEEDS THEMSELVES ARE NOT PART OF THE ESTATE, they belong to someone else.


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PostPosted: Fri Jul 15, 2011 10:52 am   Post subject:   

Quote:
THE PROCEEDS THEMSELVES ARE NOT PART OF THE ESTATE, they belong to someone else
.



Max, they are paid to someone else, but that doesn't stop them from being part of the gross estate. Look at IRS form 706.



Ex. Max dies. His only assets are a $10,000,000 insurance policy with his mom as beneficiary, a $5,000,000 IRA with his mom as beneficiary, and a $10,000,000 bank account that is a transfer on death account with him mom as beneficiary.



At death, because Max has an incidence of ownership of all this money, his estate is valued at $25,000,000. None of this money will go through probate. His mom will get all of it. It is ALL part of his estate.



When the estate tax return is done, taxes will be owed on this money. You are correct in that the normal course of action is for estate assets will need to be sold in order to pay the taxes. In this example, there are no estate assets to sell because they all went directly to Max's mom.



The IRS and Max's state (if there is a state estate tax) will go after Max's mom for the money.



Max, another way to think of this might be to look at the situation at the moment of death. At the moment of death, the money doesn't belong to the beneficiary because they haven't yet made a claim. This isn't just semantics. Keep in mind that the beneficiary has the ability to disclaim the money if they so choose. At death, the value of the money is part of the estate. The fact that it ultimately may get paid directly to a person doesn't change the fact that the money is part of the estate.



Maybe this time, you can finally admit to being wrong.

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