Does insurance beneficiary have to reimburse estate costs?

by Guest » Sun Jan 29, 2012 12:21 am
Guest

Hello. I have a crappy situation. My mother died in early January, leaving a small estate and an insurance policy for $15,000. When she got it, she said she wanted it used for her funeral, and she listed my oldest brother as the beneficiary (there was no negative relationship with her other kids - she just thought this was "easiest"). When she died, the funeral home said they could directly charge the insurance, but our brother said it would be faster to charge it to the estate account, so we went along with that (we were all in grief at this point, and just wanted to make things easy on everyone). The funeral was more costly than what my sister and I really liked, but we had the $15,000 figure in our minds and did what our brother wanted in terms of casket, etc.

So at this point, our brother has stopped discussing the insurance policy and claims that he hasn't filed for it yet and is acting really weird about it. My sister and I are worried that he's discovered he can just keep the money since he's the only beneficiary. We wondered if he can be required to reimburse the estate for the funeral? Or could he have effectively scammed us?

Total Comments: 3

Posted: Mon Jan 30, 2012 09:04 am Post Subject:

Well, my sister talked to my brother today, and he is indeed now saying that obviously my mom meant for him to have the policy. Does anyone know if we would have any success winning funeral costs from him? I suspect we are just screwed. And so sad that he's doing this to us.

Posted: Mon Jan 30, 2012 12:29 pm Post Subject:

Proceeds of the life insurance policy payable to the beneficiary is not subject to estate recovery. You can wait for him to collect the death benefit and then take him to court stating that you and your sister wish to be reimbursed, at least partly, for the funeral expenses.

Posted: Mon Feb 06, 2012 05:07 am Post Subject:

the funeral home said they could directly charge the insurance, but our brother said it would be faster to charge it to the estate account,


The "funeral home" was never in a position to "charge" the insurance company anything. Whether your brother chooses to donate his life insurance proceeds to your and your sister for his share of the funeral expense or not is his own decision, and you cannot (a) force him to part with as much as $0.01 of the money or (b) force him to pay a portion of the funeral expense.

What you and your sister can do, assuming that there is a probate action started to dispose of your mother's estate, is to file a claim for the funeral expenses that were paid as an obligation of the estate. That claim will be honored at the top of the list, right after any unpaid taxes owed to the state or federal government.

So it will effectively diminish your brother's share of the probatable estate.

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