how to contest life insurance beneficiary?

[in_this_corner]

What is the name of your state? VA

My father died unexpectedly last week and I have discovered his life insurance policy lists his second ex-wife as the sole beneficiary. They were divorced over 12 years ago. I spoke with her and she indicated she is willing to "sign over" any benefits to my sister and me since I signed as the guarantor for the funeral costs.

My concern is that if the insurance company issues a check to her and she then gives the money to my sister and me, we could incur large tax penalties.

Is there any way to contest the fact that she's named as the beneficiary to avoid this problem?What is the name of your state?

[BoredAtty]

What is the name of your state? VA

My father died unexpectedly last week and I have discovered his life insurance policy lists his second ex-wife as the sole beneficiary. They were divorced over 12 years ago. I spoke with her and she indicated she is willing to "sign over" any benefits to my sister and me since I signed as the guarantor for the funeral costs.

My concern is that if the insurance company issues a check to her and she then gives the money to my sister and me, we could incur large tax penalties.

Is there any way to contest the fact that she's named as the beneficiary to avoid this problem?What is the name of your state?

Unfortunately, there is no way to contest her as beneficiary if she is listed as such with the life insurance company. It was your father's responsibility to change the beneficiary if he no longer wanted it to be his ex. At least his ex is willing to give you (and your sister) the money.

[anteater]

..My concern is that if the insurance company issues a check to her and she then gives the money to my sister and me, we could incur large tax penalties...

In the circumstances that you desctibe, she would making a gift to you and your sister. Gifts are not considered income and those receiving gifts have no tax reporting responsibilities. Depending upon the amount, the ex may be required to report the gifts to the IRS, alhtough it is unlikely that she would have any tax liability. You can do a search here on "gift tax" if you want more info on that. There are many, many threads discussing that topic.

[Betty]

Since your father is now deceased, there is no way to contest/change the bene he named on the policy. He would have had to change the bene himself while living. It happens fairly often that people do not change the bene(s) on their pol. & the person(s) they really want to have the benefits are left out. Be happy the ex is willing to give the pol. proceeds to you & your sister - many would not.

[beausun76]

Is 100% true?

I live in MA and a friend of mine used to be a Family Probate Lawyer. We are going through a similiar situation where my girlfriend's younger sister was left as the Beneficiary on a $218 life insurance policy. Their mother stated she was going to change it so it would be split, but then she unexcpectedly died in her sleep before she could make the changes...

I was told that some courts in MA may still allow a freeze on the Beneficiaries assests id she already recieved the money while Probate takes a look at the policy. From what I am also hearing, as long as the other children were not explicity written to not be included a Judge could still go in and divide the money for a life insurance policy.

Then again, I am in MA and I'm not even sure if the above is correct. It did give us a glimmer of hope and we are going to at least consult with a Probate Attorney to see what my girlfriend's chances are.

What shocks the hell out of me is that a sibling could walk away with a large sum of money and not share any of it with her sisters. After all she's not the only one who lost a parent, all 3 of them did.

I'm sure their mother would not be happy to see what has been going on. Money can bring the worst out in a lot of us I gues...

[seniorjudge]

That doesn't sound right to me.

Here's your problem: Pa put it in writing that he wanted this woman to get the money.

Do you have anything to refute that?

[Betty]

seniorjudge is correct. Dad named the bene & didn't change it.

[BoredAtty]

Is 100% true?

I live in MA and a friend of mine used to be a Family Probate Lawyer. We are going through a similiar situation where my girlfriend's younger sister was left as the Beneficiary on a $218 life insurance policy. Their mother stated she was going to change it so it would be split, but then she unexcpectedly died in her sleep before she could make the changes...

I was told that some courts in MA may still allow a freeze on the Beneficiaries assests id she already recieved the money while Probate takes a look at the policy. From what I am also hearing, as long as the other children were not explicity written to not be included a Judge could still go in and divide the money for a life insurance policy.

Then again, I am in MA and I'm not even sure if the above is correct. It did give us a glimmer of hope and we are going to at least consult with a Probate Attorney to see what my girlfriend's chances are.

What shocks the hell out of me is that a sibling could walk away with a large sum of money and not share any of it with her sisters. After all she's not the only one who lost a parent, all 3 of them did.

I'm sure their mother would not be happy to see what has been going on. Money can bring the worst out in a lot of us I gues...

A life insurance policy is a contract between the insured and the insurer. Probate has nothing to do with it.

If I recall correctly, the very first case I read in my Wills & Trusts class in law school was about a guy who had a life insurance policy with his first wife as beneficiary. He then got divorced and remarried, and then directed in a new will that his second wife be the beneficiary of his life insurance policy. The man never changed the beneficiary with the insurer, however. After the man's death, one of the two women initiated a lawsuit to determine who would get the money. The first wife (i.e. ex-wife) ultimately got the money despite the man's clear, written communication in his will that he wanted the second wife (i.e. current wife/widow) to have the money.

[Betty]

Yep - I worked for an ins. co. & many times because people did not change their beneficiary the person the insured would have wanted to get the money at their death did not get it. People should always remember to change bene(s) when family situations change. They change wills, trusts, etc. but seem to have a hard time remembering to change bene(s) on life ins. policies. The ins. co. pays to the bene(s) named in the policy (contract) - not the will.

[Dandy Don]

It remains to be seen whether she is truly willing to sign over the money to you or not--when she actually sees the check she may get greedy and decide to keep it for herself or she may have been just saying she would sign it over just to get rid of you asking about it. But if she truly does sign it over, you have no federal tax worries whatsoever, but you can check with a CPA to make sure there is also no state liability.

DANDY DON IN OKLAHOMA (tiekh@yahoo.com)

[moburkes]

It remains to be seen whether she is truly willing to sign over the money to you or not--when she actually sees the check she may get greedy and decide to keep it for herself or she may have been just saying she would sign it over just to get rid of you asking about it. But if she truly does sign it over, you have no federal tax worries whatsoever, but you can check with a CPA to make sure there is also no state liability.

DANDY DON IN OKLAHOMA (tiekh@yahoo.com)

I wouldn't consider it a case of greed at all. The person who was responsible for making the change didn't.