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Does money received as beneficiary considered a part of an Estate?

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NotADumbBlonde

Junior Member
What is the name of your state (only U.S. law)? New York

My 52 year old brother died unexpectedly last week. He was never married, never had children. He rented a room from our mother, and had no property other than a used vehicle.
He lost his job 4 weeks prior to his death, so had no health insurance or life insurance.
My question is:
He had a small retirement account (less than $8000) that he designated me as the sole beneficiary. Does this money have to be considered part of his estate? Not that I want to keep this money for my own, but I am wondering if this money has to be considered part of the estate to be used to pay the medical bills that were incurred at the time of his death (ambulance and emergency room).
Thank you.
 
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curb1

Senior Member
Did he have medical insurance and life insurance with his job? Have you checked with them to see if the grace period after he lost his job was still in effect?
 

anteater

Senior Member
If you are the designated beneficiary on the account, it is not part of your brother's probate estate and, as far as I know in NY, will not be subject to claims by your brother's creditors.
 

racer72

Senior Member
If you are the designated beneficiary on the account, it is not part of your brother's probate estate and, as far as I know in NY, will not be subject to claims by your brother's creditors.
If that money is in a 401k, yes it is an asset. From a site explaining probatable assets in New York:

•Finally, 100% of the value of your retirement accounts, including IRAs, 401(k)s, and annuities will be included in your taxable estate.
 

tranquility

Senior Member
I think you misread, racer72. Inclusion in the gross estate for estate tax purposes is different from our question. Besides, the information at about.com is incorrect regarding certain annuities. They can be structured to be outside of the gross estate even for estate tax purposes.
 

anteater

Senior Member
If that money is in a 401k, yes it is an asset. From a site explaining probatable assets in New York:
There is a difference between the taxable or gross estate and the probate estate.

That, along with the half dozen or so other uses for the word "estate", leads to a lot of confusion.
 

LdiJ

Senior Member
There is a difference between the taxable or gross estate and the probate estate.

That, along with the half dozen or so other uses for the word "estate", leads to a lot of confusion.
Anything that passes outside of the estate, which would include an account like this one that has a beneficiary, cannot be touched by creditors. That is well known fact here so I don't understand why this is even an issue.
 

anteater

Senior Member
Anything that passes outside of the estate, which would include an account like this one that has a beneficiary, cannot be touched by creditors. That is well known fact here so I don't understand why this is even an issue.
That is simply not true. And, if it is a well known fact here, it should not be.
 
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anteater

Senior Member
With a bit more time now...

Some creditor in some state may have been able to reach proceeds from life insurance, retirement plans, IRA's, maybe qualified and other annuities, that have designated beneficiaries. But, if that is the case, it would certainly be an exception to the general principle that those are not reachable by the decedent's creditors.

However, other non-probate transfers are potentially available to satisfy the decedent's creditors. It depends upon the state. For example:

Missouri
http://www.moga.mo.gov/statutes/C400-499/4610000300.HTM

Washington
http://apps.leg.wa.gov/rcw/default.aspx?cite=11.18.200

Indiana
http://www.in.gov/legislative/ic/code/title32/ar17/ch13.html


And, while the Uniform Probate Code has not been adopted by all states and not in its entirety by states that have adopted it, the NCCUSL recommends:

Section 6‑102. Liability Of Nonprobate Transferees For Creditor Claims And Statutory Allowances.

(a) In this section, “nonprobate transfer” means a valid transfer effective at death, other than a transfer of a survivorship interest in a joint tenancy of real estate, by a transferor whose last domicile was in this State to the extent that the transferor immediately before death had power, acting alone, to prevent the transfer by revocation or withdrawal and instead to use the property for the benefit of the transferor or apply it to discharge claims against the transferor’s probate estate.

(b) Except as otherwise provided by statute, a transferee of a nonprobate transfer is subject to liability to any probate estate of the decedent for allowed claims against decedent’s probate that estate and statutory allowances to the decedent’s spouse and children to the extent the estate is insufficient to satisfy those claims and allowances. The liability of a nonprobate transferee may not exceed the value of nonprobate transfers received or controlled by that transferee.

...
 
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