Transfer or Deny Life Insurance Beneficiary

[TurkTide]

What is the name of your state (only U.S. law)? Illinois

My father (divorced from my mother) passed away and my brother and I received word that he had a life insurance policy we were not aware of. It turns out my uncle was named the beneficiary back when my brother and I were minors and it was never changed.

My uncle wants my brother and I to have the money. Is there anyway for him to transfer the beneficiary title?
Could he deny the proceeds? If so, would the money go into the estate? or would the order of precedence determine a new beneficiary?
If we "contest" the beneficiary, and my uncle is agreeable, does the money go into the estate?
We'd rather the money not go into the estate. If it helps, we are talking about a relatively small total amount of $22,000.

If my uncle receives the money and then gives it to us, would we then be subject to Medicaid's 5-year lookback period if my uncle would go into a nursing home in the next 5 years and applies for Medicaid?

Any help is appreciated.

Chris

 

[cbg]

When your uncle called the life insurance company and asked them these questions, what did they say?

 

[anteater]

Could he deny the proceeds? If so, would the money go into the estate? or would the order of precedence determine a new beneficiary?
If we "contest" the beneficiary, and my uncle is agreeable, does the money go into the estate?

He could disclaim. Your uncle should check with the insurance company about what happens if he does. Probably payable to the estate.

If my uncle receives the money and then gives it to us, would we then be subject to Medicaid's 5-year lookback period if my uncle would go into a nursing home in the next 5 years and applies for Medicaid?

One of the things that is sometimes forgotten about gifts and the 5 year look back is that the gifts be made with the intent to qualify for Medicaid. Of course, the state agency reviewing applications will make the assumption that asset transfers within the look back period were made with that intent. But, it seems to me that there would be a good case here to contend that your uncle felt that he was named as the beneficiary as a "trustee" since you and your brother were minors at the time. And, since you two are no longer minors, he is merely fulfilling your father's intent that you two receive the proceeds.

But, document... document... document now.

 

[TurkTide]

Thank You. I was not aware Medicaid recognized intent at all. I did some additional reading and think we will probably go that route. As far as documentation, you think a notarized letter from an attorney stating what the money was from and why he is "gifting" it and the money only being in his possession for as short as time as possible will suffice?

Thanks again.

 

[cbg]

Tell me what you think having the letter notarized will accomplish.

 

[LdiJ]

Thank You. I was not aware Medicaid recognized intent at all. I did some additional reading and think we will probably go that route. As far as documentation, you think a notarized letter from an attorney stating what the money was from and why he is "gifting" it and the money only being in his possession for as short as time as possible will suffice?

Thanks again.

The only value that notarization would have is it would attest that the signature on the letter really belongs to the attorney. There is certainly no harm in notarization, but that is all it would provide.

 

[TurkTide]

I'm new to this, but thought by having it notarized it would assure that the signature (I was thinking the letter from the attorney would be signed by my uncle) was true as well as the date. I thought if the letter was completed at the same time as the transfer of money, or before, it would be better than later and by having it notarized, it would prove it wasn't a backdated letter. But this is all new to me. I have a meeting with an attorney scheduled for tomorrow. I was just looking to go into that meeting with a little knowledge.

Thanks again,

Chris

 

[LdiJ]

I'm new to this, but thought by having it notarized it would assure that the signature (I was thinking the letter from the attorney would be signed by my uncle) was true as well as the date. I thought if the letter was completed at the same time as the transfer of money, or before, it would be better than later and by having it notarized, it would prove it wasn't a backdated letter. But this is all new to me. I have a meeting with an attorney scheduled for tomorrow. I was just looking to go into that meeting with a little knowledge.

Thanks again,

Chris

Like I said, there is not harm at all in having the letter notarized and as you stated, it would prove that the letter was not backdated and that the signatures were valid.