Son Died, Life Insurance Agency Wants Probate

[mamabear2102003]

State of Michigan.

Son passed away in March of this year, leaving behind a young wife (19), one son (18 months) and a soon to be born child. I have been attempting to help my DIL wade through all the paperwork since his death.

She received a letter from the life ins company that they would be unable to release my grandsons portion of the proceeds until she went through probate and was appointed his guardian (and from what I'm seeing, there will also need to be a custodian appointed as well). First of all, I don't understand why she must be appointed guardian, since she is mom. Second, I don't understand why she must probate the estate, since there are NO real assets (he was only 21), and only a couple of bills that we've already addressed, and the only thing left is the life insurance. My son's intent was that if something should happen to him, the life insurance was to go to mom to raise the babies. From what I'm reading, they are going to want some type of trust set up, which is a pain from an accounting standpoint (not to mention, probate itself, with the help of an atty, is going to cost her about $2000, and expense that she doesn't need at this point).

Can anyone better explain to me the procedures and the purpose of all this? I need some grasp of what is going on in order to better direct her. TIA!

[LawResearcherMissy]

Was your grandson also named as beneficiary on the policy? If he was, I don't see any way around probate and a trust.

About a zillion years ago, when my husband and I first bought life insurance, we had intended to name each other and our sons as 50/25/25 beneficiaries on our policies. Our insurance agent advised strongly against it, on the grounds that if either of us passed while our kids were still minors, there would be a mountain of paperwork and lawyers to contend with in order for the kids to receive their money.

This is to ensure that the named beneficiary actually gets their funds, as opposed to finding out that mom or dad has blown through their inheritance without their knowledge.

[mamabear2102003]

I was afraid that you were going to say that. My son's intent was that the policy would go to his wife (after many arguments relating to him being only 21, and he wouldn't have to worry about it... he wanted to turn down the life ins because he was immortal) to raise the babies. I looked up the paperwork, and it's confusing, so he tried to fill it out the way he should, but was thinking that a 50/50 share would mean mom got it. (Have you ever had a day when you regretted telling your child that he was an adult and he needed to figure this out on his own???? I'm having one!)

I'll advise DIL to consult an atty. Thanks LRM!

[paleolith]

Speaking without knowledge of all the issues, I would still point out that she could talk with the county court office about the probate. She might be able to do that without an attorney if this is the only issue. The trust is probably another matter. But LRM knows a lot more about it than I do.

Edward

[mamabear2102003]

We've spoken to the local probate and an atty, and will NOT have to open a probate but instead a conservatorship for grand baby. The proceeds will need to go into a protected account (meaning that no money can be withdrawn without court order, and all transactions will need to be approved) until he turns 18. We've looked over the required forms, and there is no way that she can do this without an atty because I can't figure it out. The first thing that we've heard on every contact is 'This is why we don't name minors as beneficiaries, because it becomes complicated." You can bet that I have contacted all other family members and advised them to check their beneficiary forms!

Thanks for all the help and advice here, we really appreciate it!