As a “fudiciary” to my late mother, why do I have to go through probate?
by admin ~ January 22nd, 2006 . Filed under: Insurance .
LionBoop asked:
I think I understand it for the most part. My concern is that my mother didn’t have any assets. A house purchased with my brother and that’s it. A life insurance policy that’s just enough to pay for funeral expenses and possibly a headstone. I’m her eldest child named as the beneficiary to this life insurance policy. She was on state assistance about 15 years ago. (In CT) will they try to claim this little bit of insurance and leave us stuck with the funeral expenses? Her “estate” consists of this house which now belongs to my brother, “in survivorship”. Any advise is greatly appreciated.
Lesli Workman
I think I understand it for the most part. My concern is that my mother didn’t have any assets. A house purchased with my brother and that’s it. A life insurance policy that’s just enough to pay for funeral expenses and possibly a headstone. I’m her eldest child named as the beneficiary to this life insurance policy. She was on state assistance about 15 years ago. (In CT) will they try to claim this little bit of insurance and leave us stuck with the funeral expenses? Her “estate” consists of this house which now belongs to my brother, “in survivorship”. Any advise is greatly appreciated.
Lesli Workman
January 23rd, 2006 at 5:20 am
Depending on the state. There should be no probate needed. If the value of the estate is under $650K in Calif. there is no probate at all. You can elect to have a probate, but why spend the money?
January 24th, 2006 at 11:17 pm
Probate is a legal process that settles the estate of a deceased person. It is not an attempt to confiscate the assets, but rather to ensure that the assets are properly distributed. The probate will determine that you are the beneficiary of the insurance policy, and that the house passes to your brother legally according to the way title was recorded. Based on what you describe, the process should be simple and quick, and you should have nothing to worry about. As the fiduciary, you obligation is to provide the documents and evidence to the probate court. The process may involve nothing more than your making a statement in the county clerk’s office describing the situation as you did above. That is, probate may be waived because the estate is too small.
January 26th, 2006 at 2:41 pm
Not sure… my brother was in a home for 10 years in NY and the state paid for it and they made no claim against his life insurance policy benefits — but if your mother was on assistance 15 years ago and they have not requested pay back - why report it anyway.
Not sure what type of assistance your mother received but this site might help in clarifying what is expected.
January 26th, 2006 at 4:10 pm
A house IS an asset. The life policy, if YOU are named as beneficiary on the polict, is NOT part of her assets, you’ll get paid directly.
But you’ll have to go through probate so you can get the legal authority to sell the house, and distribute the procedees (her half of the house) in accordance with her will or state law. Oops, just saw the survivorship thing. That’s going to vary on a state by state basis . . . but he’s NOT going to be able to sell the house with her name on it. So, you go through probate to take HER name off the deed, with YOUR authority.
January 28th, 2006 at 12:12 pm
Probate is the process that the state makes everyone go through if there is a will or no will from the deceased. If there is a trust in place then the Probate process is skipped. The way that most probates work is similar to how the IRS determines how much Estate Tax is involved with the estate. All assets INCLUDING Life insurance death benefits are included into the GROSS estate, this is the determining factor as to wether or not the estate is large enough to be mandated into the probate process futher or if any Estate taxes will be owed.
With regards to state assistance, there is a good probability that the state will claim that repayment will need to be paid by the heirs (you and your brother). Get a good lawyer and see if you can at least negociate a settlement with the state on a lower amount. Make sure the lawyer will listen to your situation first without billing you.
You will still recieve the life insurance tax free, one thing you will want to check in your state is wether or not Life Insurance Death Benefits are free from creditors, in the state of CA it is not, so again if the state decided that it wanted reimbursment for it’s assistance, and in CT life insurance is not protected from creditors, the courts could say you need to pay the state with the life insurance. If it is protected, than you don’t have to worry about the life insurance, but your brother may want to make plans on how to protect the house.