by bjamm1972 » Wed May 27, 2009 01:15 am
My ex-husband passed away about a month ago. We just found out that my ex's dad was beneficiary with our 14 year old son as 2nd on the policy. My ex's dad passed away 2 years ago and that leaves our son as beneficiary on the policy (which is a large policy) we live in Illinois. What are the laws? What do I need to do?
Posted: Thu May 28, 2009 10:46 am Post Subject:
Hi bjamm1972,
They can't just decide to name themself trustee.
So, I guess if the insurance company fails to be the 'trustee', then there's nothing to worry about. If the money should go to the child as the rightful beneficiary, then there's nothing much you could do about it. You might just need to wait till you're sure of the carrier's intentions.
Make sure that the money is being used for the benefit of the child in the end. And let us know if the carrier talks of any kinda fees. We all would be eagerly waiting to know what follows next..please do care to share with us..would you?
Steven
Posted: Thu May 28, 2009 11:27 am Post Subject:
Insurance Expert I don't believe we're on the same page.
If Mom can simply go to the bank and set up a UTMA account, then the insurance company may as well just pay the money to her since she would be the one who actually controls the account.
What you're argueing ( I think?) is that Mom can simply appoint herself as GUARDIAN of another person's money.
I'll bet my SAFE designation the insurance company isn't going to pay out any money where a minor is the beneficiary without a court order.
Mom could be a drug addict, in debt up to her eyeballs, party girl, alcoholic, have mental problems or other problems.
Now since insurance companies get sued all the time do you think the 14 year old may sue the insurance company for paying his money to a UTMA account that Mom set up then wasted the money.
From the insurance company's perspective they will want to insulate themselves from a future lawsuit from the rightful beneficiary.
That's why Mom on this thread will have to be the court appointed guardian of the minor child's property. She'll still be able to use the money as she pleases after she is the COURT ORDERED guardian. Once that happens the insurance company will pay the claim and the 14 year old can't come back and sue the insurance company if Mom wastes the money.
Now you are correct. Once Mom gets the court order then yes she'll have to set up some type of custodian account at some bank to receive the funds. I'm NOT argueing that point.
Posted: Thu May 28, 2009 01:25 pm Post Subject:
Gary,
Your SAFE designation is safe. The insurance company will want a court order if the minor is the named beneficiary.
(This is why minors shouldn't be named beneficiaries. SDCharger, this does not mean to name someone else instead!!!)
If the money is intended for a minor, the owner should set up a trust while they are still alive. The trust remains unfunded unless they die. The insurance proceeds will then go to the trust instead of directly to the minor. The terms of the trust will determine when the child can take control of the money.
The insurance company can't just pay the money to mom because it is not mom's money. If the child is the named beneficiary and mom is the guardian and has a court order, mom will not legally be able to use the money as she pleases. She will be able to illegally use the money as she pleases. Legally, she will only be able to use the money to benefit the child.
You're right. I'm wrong. Thank you.
Fortunately, I have never had to deal with this situation. In my practice, in the vast majority of cases, the primary beneficiary is an adult. If the primary beneficiary is not an adult, I always send them to an attorney and take my direction from the attorney on how the beneficiary designations should read.
Posted: Fri May 29, 2009 03:50 am Post Subject:
you guys are all great. i am quickly learning a bunch. this was such a terrible unforseen tragedy. i still cant get over that my ex left our 14 year old as beneficiary. well, i have got all information to the insurance company, so i guess we will see. i think the guardian ad litem is a good idea though, just so noone can say that i am misusing or abusing my sons money. woulden't you think? i even talked to the funeral director to see if he ever had come across a situation like this and he hadent(alot of times the beneficiary of a life policy will have the check sent directly to the funeral home so they can receive their costs first) once again, thanks for all the input. i will keep you all informed of this and how it turns out. peace
Posted: Fri May 29, 2009 09:45 am Post Subject:
There's not going to be anything difficult. The insurance company, like Gary said, is just going to want to make sure that it's ok to release the money.
You will set up an UTMA account. This is no more difficult than setting up any other bank account or investment account. The insurance proceeds will go in there. As guardian, it will be your responsibility to make sure that the money is spent for your son's benefit. As long as this is how you use it, there will be no issues.
Posted: Sat May 30, 2009 06:47 am Post Subject:
Hi bjamm1972,
i think the guardian ad litem is a good idea though, just so noone can say that i am misusing or abusing my sons money. woulden't you think?
It surely is a good idea..especially when you have kids as beneficiaries. Just make sure that you're spending it for his benefit and all other things would fall in to place quite naturally.
alot of times the beneficiary of a life policy will have the check sent directly to the funeral home so they can receive their costs first
I understand that...but are you gonna experience the same thing? What did the funeral director say?
Steven
Posted: Sat May 30, 2009 10:59 pm Post Subject:
ok well, the funeral director said he had never come across a situation like this. let me say this, yes, i am guardian of my minor child and his estate, but the court will appoint a guardian ad litem to oversee my actios and to approve any withdraw of the money. i think i am right about that? does anyone know? this money is intended for my son a car, college and to invest ...this is his future. hope to let you all know something new soon. thanx
Posted: Sat May 30, 2009 11:59 pm Post Subject:
Unless the court has reason to believe that you are a bad parent who is going to steal your kid's money, there is no reason why they would appoint a guardian ad litem.
Posted: Sun May 31, 2009 12:08 pm Post Subject:
but the court will appoint a guardian ad litem to oversee my actios and to approve any withdraw of the money. i think i am right about that? does anyone know? this money is intended for my son a car, college and to invest ...this is his future. hope to let you all know something new soon. thanx
I had a similar situation in my own family...my brother and sister in law were divorced, neither remarried, in fact they were still 'kinda' together...they have two daughters he still had her as beneficary, on a life policy ...the girls (because they were divorced) were his heirs...he had 401k account, owned a home etc...the sister in law got an attorney and was named 'something' that put her in charge of his estate, for the girls...the girls also receive ss benefits...it ended up being around maybe close to 100k in all (not counting the ss payments they get/got till 18 yrs old)..anyway...she doesn't have prove or request any type of permission to use any of this money....in our case, we were all fine with this and had to sign off that we (as sisters, mother and father) were not challenging any of the estate...I'm sure this is a state to state thing...and I would think a good idea to atleast have one visit with an attorney to make sure you have everything that you need legally to protect your son as heir.
Posted: Fri Jun 19, 2009 11:22 pm Post Subject: Guardian Ad Litem
At 14, I'd think the minor child is of age to agree to a guardian. If mom petitioned the court for appointment on the minor's behalf and the minor agreed to have mom appointed and the judge agreed, isn't the issue resolved?
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