Can an ex-spouse draw life insurance benefits?

Submitted by Anonymous (not verified) on Sat, 12/06/2008 - 15:25

My boyfriend's father died in August. His divorce was finalized from his ex-wife in April. Apparently, he never changed her as the beneficiary on his life insurance policy. My boyfriend and the siblings really didn't care, because they didn't have the money to begin with-so what would it matter if they didn't have it now.....however the ex-wife agreed to split the insurance money 5 ways--believing it was only fair and she had a decent relationship with all the kids/grandkids. My boyfriend and his siblings had a letter drafted by their lawyer stating that the ex-wife agrees to split the life insurance money and she signed it. It was sort of her suggestion. After all, their dad divorced her (and on a side note, his reasons for divorcing her had something to do with him pulling his retirement out early upon her suggestion so that she could place some money in an acct that would draw interest and some in the bank acct to pay bills with, only to find out that the money disappeared and she began using his credit card to pay for bills, subsequently causing my boyfriends dad to file for bankruptcy). My boyfriend got a letter in the mail yesterday from his step-mom stating she's going to be keeping all the insurance money basically because she feels entitled to it. She rattled off a list of things she has done that are only simply things a nice person would do without payment. (claims she paid his cell phone bill for a year, a gas bill in 2/08, their joint tax return in 2007, and has been feeding the cats since his death and mailing his mail to my boyfriend's sister. It's so ridiculous....however, my question is this.

Can she get away with this if she signed a notarized document stating she agreed to split the insurance money? After all, they were divorced and it was more than likely an oversight on his part. Also, would something like this be suitable for civil court and how long should it take???

Thanks all.

Posted: 14 Mar 2010 02:43 Post Subject:

My oldest sister wants to be reimbursed for the money she used to pay for his funeral expenses from the estate's proceed.

I thought she used the life insurance policy...was it not sufficent to cover the costs? If she had to pay out of pocket for anything, why would you not think this 100% fair that she be reimbursed first?

Since there were only a limited amount of space allowed to list the remaining children as beneficiaries, does this mean we are not intitled to the money?

I'm confused, what money? Are you saying now, that there was money left from the life policy AFTER she paid all the expenses?

Posted: 14 Mar 2010 11:48 Post Subject:

Saw, Your father didn't name you, so you don't get anything. If you father wanted to name you, he could have done so. He could requested a form with another line or the beneficiary could have been something like, "all children of the insured."

Posted: 15 Mar 2010 11:45 Post Subject:

He sure could've...all of ours said, "children of this marriage share and share alike"

Posted: 16 Mar 2010 02:22 Post Subject:

She paid the funeral home with the beneficiary money she received from his life insurance policy. The amount of the insurance proceeds was not enough to cover the our father's burial expenses, I paid the remaining balance of the burial expense. She wants the money she paid for his funeral to be paid from the proceeds fof his estate. She entered into an agreement with the funeral home and paid for his funeral. As I see it, she gets nothing.

Posted: 16 Mar 2010 10:34 Post Subject:

As I see it, she gets nothing.

I sure get your point...and frankly agree with you...not sure a judge will though....

Posted: 17 Mar 2010 02:37 Post Subject:

She paid the funeral home with the beneficiary money she received from his life insurance policy. The amount of the insurance proceeds was not enough to cover the our father's burial expenses, I paid the remaining balance of the burial expense. She wants the money she paid for his funeral to be paid from the proceeds fof his estate. She entered into an agreement with the funeral home and paid for his funeral. As I see it, she gets nothing.

I'm having trouble following this. You said she paid for part of it with the life insurance proceeds, and you picked up the rest. What is there for her to enter an agreement with the funeral home over?

Posted: 17 Mar 2010 02:56 Post Subject:

She signed papers required of the funeral home to get paid from the insurance company. The money the funeral home received from the insurance company did not cover the total funeral. To make a long story short, as the administrator, she moved her daughter in our father's house. Under her administration, our father's house was sold for delinquent real estate taxes (18,000). I redeemed the house back. I hope the judge will make an ethical decision in favor of me and my other siblings.

Posted: 26 Mar 2010 02:49 Post Subject:

A beneficiary can do as they please with the money tey receive from an insurance company. It's their money.

If a person pays funeral expenses for a deceased person, even if a parent or relative, they are entitled to be reimbursed by the Probate Court for their expense. If you paid a portion of the funeral costs, you, too, have a claim against the estate.

The redemption of the house is a trickier matter. Is title now vested to you? If so, you may have a claim against the estate for that, which would properly be apportioned to the other beneficiaries of the estate. However, that would probably require sale of the property to another person. Otherwise, you may have to reimburse the other beneficiaries for their share of the value of the property.

This seems to have become very complicated -- couirtesy of Dad who died intestate, and will require a good estate-law-certified attorney to properly represent your interest, and possibly that of one or more of the other beneficiaries.

Get your laywer ASAP! Their fee is determined by the Court in most states. You should have little or no out of pocket expense. Any fee award will be deducted from the estate assets before proceeds are distributed.

Posted: 09 Jun 2010 01:02 Post Subject: life insurance

how long till a benificary receives money from a life insurance claim

Posted: 09 Jun 2010 04:25 Post Subject:

Once the claim and beneficiary are verified by the insurance company, they usually cut the check within a day or two at the most.

To validate the claim, a certified copy of the death certificate must be sent to the insurance company along with the company's claim form.

Most companies will settle death claims within 5-7 days of receiving the death certificate, if the beneficiary is known and can be located.

Posted: 13 Oct 2010 08:59 Post Subject: Funeral Expenses paid with life insurance

my daughter's father died and she was in Iraq at the time she came home for the funeral and her father's father(grandfather) had her dad take my daughter's name off the life insurance and 401 k plan because he felt she would die over there and her father did just that changed his beneficiary to his father. When her father died her grandfather said he would pay for the funeral with the life insurance policy, now that my daughter had to get an attorney for the estate (only child) and now that the estate is finalized the lawyer wants to reimburse her grandfather the money for the funeral expenses even though he had agreed to pay for it and did with the life insurance policy, so now she has to come up with the money to pay for the funeral expenses from the estate since she is executor of the estate, which doesn't seem fair at all since it was already paid for out of the life insurance policy which if my daughter's name would have been beneficiary she would have paid for the funeral with the life insurance policy. Does she have to pay the grandfather for the funeral expenses already paid for out of the estate?

Posted: 14 Oct 2010 06:21 Post Subject:

The nerve of some folks. That's why children are supposed to bury parents, not the other way around.

Funeral expenses not prepaid by the decedent are properly the expense of the estate. Normally, when it is available, someone uses the life insurance proceeds to pay for it, and that's that. If granddad is such a cheap SOB that he filed a claim against the estate after using life insurance proceeds to pay the cost, and not money out of his own pocket in the absence of insurance, well so be it. He is lawfully entitled to do that.

And the court is pretty much obligated to award it. But as executor of the estate, your daughter can deny the claim and force Granddad to argue his claim before the judge. That should be pretty embarrassing on its own. He might just drop his claim as a result.

Regardless, no more Christmas presents, birthday presents, or invitations to Thanksgiving or Easter dinner unless he pays for the gifts or the meals. Be sure to charge full retail price, plus tax! He has the money to pay for it.

Posted: 21 Oct 2010 01:48 Post Subject: Beneficiary

I am sole heir of my Uncle's estate, per his will. He changed his life insurance in 1999 naming me as the beneficiary. How do I go about claiming this life insurance? Who do I contact and do I have to include the will in claiming the money? Thank you for your help.

Posted: 21 Oct 2010 07:32 Post Subject:

If you have the name of the insurance company and the policy number, all you need to do is contact them for the claim form, fill it out, sign it, and submit it with a certified copy of the death certificate. You'll have your check in a week or two. No need to provide a copy of the will (it's meaningless to the insurance company).

Posted: 10 Feb 2011 07:50 Post Subject: Life Insurance Beneficiary

I want my 4 yr old granddaughter to be the Beneficiary of my Life Insurance and 401k. What can i do so that my daughter and her boyfriend cant get their hands on the money?? I was told my daughter would get the money because she is her guardian..& my granddaughter is not 18. Thanks for ur help.

Posted: 11 Feb 2011 12:57 Post Subject:

You would probably want to consult an ESTATE PLANNING attorney and discuss setting up an IRREVOCABLE LIFE INSURANCE TRUST for the life insurance proceeds.

As for the 401(k), if you are married, you will have to get your spouse to sign-off as beneficiary in order to name your granddaughter as the new beneficiary. I am not certain that you can designate a trust as the beneficiary of your 401(k), but because your granddaughter is a minor, the money cannot be paid directly to her, and would be placed into some form of trustee account for her benefit, normally supervised by her guardian. The estate planning attorney can help you prevent that from happening either with a testamentary trust to receive the 401(k) proceeds or through a different mechanism.

Be sure you deal with an attorney who is CERTIFIED as an estate planning specialist, not just someone whose advertisement says Wills & Trusts.

In the meantime, you should designate your granddaughter as your life insurance beneficiary. You can instruct the insurance company to hold all the proceeds until she turns age 18. They will pay the proceeds plus interest. If you later set up a trust for her, then the beneficiary may be changed to the trust. That's no problem. But it's always best to have the beneficiary clearly stated in writing with the insurance company to prevent any problems or challenges.

Call the insurance company for instructions on how to change your beneficiary designation. Do that ASAP!!

Posted: 11 Feb 2011 09:34 Post Subject:

You would probably want to consult an ESTATE PLANNING attorney and discuss setting up an IRREVOCABLE LIFE INSURANCE TRUST for the life insurance proceeds

Wow! We've got a great response and an idiotic response all in one.

La2592, you absolutely need to go see an estate planning attorney.

There is zero reason to set up an irrevocable life insurance trust. An ILIT is needed when it makes sense for a trust to own the coverage. There is absolutely no reason for a trust to own this policy. For the cost involved with setting up the ILIT and the annual Crummey letters, etc., she could probably buy a couple hundred thousand of extra term insurance.

A trust is needed as beneficiary, but not as the owner. When this is done, it is not an ILIT.

La2592, the guardian for your daughter and the one who controls the money doesn't need to be the same person. The attorney will set it up so that the money goes into a trust and a trust worthy person can be the trustee.

Posted: 12 Feb 2011 03:25 Post Subject:

There is zero reason to set up an irrevocable life insurance trust.

Really? How can YOU say that? Neither you nor I know what the OP's situation is. All I said was "discuss" setting up an ILIT. There is absolutely nothing wrong with that advice . . . it is FAR from idiotic.

The reason to set up an ILIT is to remove the value of the insurance proceeds from the owner's estate, and exempt them from ESTATE TAXES. Simply putting the insurance in a trust with the trust as owner does not accomplish that.

In case you hadn't heard, ESTATE TAXES are back. If Grandma has more than $5,000,000 worth of taxable estate, the life insurance proceeds will be included in that liability unless they are properly removed from her estate. An ILIT is one method of doing that and it escapes the 60-month lookback for both Medicaid and estate taxes. A common trust will not escape the lookback, even if made the owner. Ownership must be irrevocable to do so.

But an estate planning attorney would DISCUSS all of that and more, and if an ILIT was in the prescription it would be part of the discussion. If not, an alternative would be on the table. One way or another, the money needs to be in a trust, preferably before Grandma dies. On that, we probably agree, no questions asked. And Grandma will need a will, perhaps, to direct other aspects of her postmortem affairs as necessary.

But you're also right, the trustee and the child's guardian do not have to be the same person. However, left up to family/probate court to decide, they probably would be. So Grandma would be wise to consult the attorney ASAP and get the ball rolling in whatever direction the attorney believes is most appropriate for her situation.

Posted: 12 Feb 2011 03:33 Post Subject:

she could probably buy a couple hundred thousand of extra term insurance.

You don't know that either (and neither do I). Depending on Grandma's age and health status, she might not be able to get $1 of term life.

Or she might be young and healthy enough to get a 10- or 20-year preferred policy.

Posted: 12 Feb 2011 12:38 Post Subject:

I said, "probably". Of course, I don't know if she is insurable.

Posted: 12 Feb 2011 12:45 Post Subject:

I said that there is zero reason to set up an ILIT because the concern presented has nothing to do with ownership of the policy or estate taxes. She is concerned about the wrong person getting the money. This is not the purpose of an ILIT. It's nice, though, how you are covering your tracks.

If there is a reason to discuss setting up an ILIT in this situation based upon the facts presented, you should be bringing up the subject with every single life insurance question here.

If estate taxes were the issue here, the concern wouldn't solely be the life insurance and the 401(k).

Just be honest when you are wrong. Unless the concern is estate taxes, a trust is needed as beneficiary, but there is no reason for an ILIT.

Posted: 12 Feb 2011 07:48 Post Subject:

a trust is needed as beneficiary

On this there is no disagreement. What type of trust is up to the attorney to decide. ILIT or not. There is no covering one's tracks here.

However, in a parallel post in the AUTO INSURANCE forum, the OP does mention that she has no property, only the life insurance and 401(k) -- information not posted here -- so yes, the ILIT is probably not necessary in her case. But I'll let the attorney settle the matter for her. As should you.

Posted: 15 Feb 2011 02:49 Post Subject:

Max, you are the one who explicitly said an ilit. There was no information given for one to even start thinking in that direction. Ilits are used to solve some issues invoving ownership. She was looking to solve abeneficiary issue.

Posted: 17 Feb 2011 04:13 Post Subject:

the beneficiary on a life insurance policy can be changed at any time unless it is an irrevocable beneficiary. If the person dies and the beneficiary has never changed between old to new wives then im sure your pretty much stuck with that. sorry.

Posted: 17 Feb 2011 08:45 Post Subject:

Orlando . . .

There are a number of states that now require, through their insurance codes, that following a divorce, automatically forces the ex-spouse off the policy. My reading of those codes would enforce this against any designated beneficiary, including an irrevocable beneficiary.

It would not be improper or unlawful for the policyowner, following a divorce, to rename the spouse as the beneficiary or irrevocable beneficiary.

Posted: 11 May 2011 04:22 Post Subject: Mystery Beneficiary

My brother passed and had a substanial estate. His insurance policy at his job is a mystery. He had no wife nor kids and so we his family are in the process of ggoing thru probate court to settle his estate. His insurance policy through his job has given us the run around, will not release name of beneficiary and was so late in getting back with funeral home we had to have him cremated. They finally got back with the funeral home and they called to me to verify some info but when I asked who the beneficiary is they will not tell me who it is. Do I have the right as his sister to know that information.

Posted: 12 May 2011 04:39 Post Subject:

Do I have the right as his sister to know that information.

If the insurance through your brother's employment was a group policy, his employer has the information about any beneficiary listed on his enrollment card. The insurer relies on the employer to obtain, maintain, and provide that information following the death of a covered employee, so it's quite possible they don't know who it is (if anyone).

Contact your brother's employer's HR department (most likely the responsible party at the employer) and talk to them about the situation. As a next-of-kin, they should not object to giving you the information.

If they do, then you need to contact your state's Dept of Insurance for assistance. This is not a complex issue, and no one should be dragging their feet as you indicate.

Posted: 21 Jun 2011 03:58 Post Subject:

Changing a beni doesn't take long at all you just fill out the paperwork and its processed but consider it changed anyhow when the paperwork is turned in..

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