Who gets the insurance check?

Q: If a house is owned by several family members and it was damaged, can one family member cash the Insurance check issued for repairs? Brothers and sisters own a house that one sister lived in. It was damaged during a Hurricane. Now the one sister left with the insurance check and won’t return our calls.

A: More information is needed. Who owns the policy? Who is the listed payee or beneficiary? If she pays the premiums and is on the policy as the owner or beneficiary, the insurance company may have no liability if they pay her. You may go after her if she was paid and did not use the proceeds to repair the property. If it is clear-cut case that the proceeds were payable to all owners for the purpose of home repair, she may have committed the crime of Theft. I would get more details from the insurance company, contact a lawyer and possibly the police if certain facts exist.

Does a child from a previous marriage have a legal claim to life insurance?

Q: A father died, and he was married with 2 children in that marriage, a twelve-year-old and an eight-year-old. He also had a child from a previous relationship who is 18 years old and attending college. The father had three life insurance policies of $250,000, $250,000, and $200,000 for a total of $700,000. The widowed mother has no intention of giving the 18-year-old step-daughter any money. I don’t know how the policies are named, but I do know the widow does not want the step-daughter to know she received payouts from these policies. Does the eighteen-year- old have a legal claim to any of this life insurance money? (Scott Twp., PA)

A: Insurance policies will be paid to living beneficiaries of the decedent. If there are no living beneficiaries, the policy will likely be paid to the estate of the decedent. If there is no will in place, the proceeds of the policy will go in to the estate and paid to the intestate (no will) heirs. Under PA intestate law, the daughter is an heir. It is possible that the proceeds of this policy could have been addressed in a divorce or prenuptial agreement, which therefore could preempt the intestate or testate laws. If this child was a beneficiary listed on the policy or if there are no living beneficiaries on the policies, she has a chance of receiving money. If the step-mother is hiding the information on the policy, hire a lawyer to threaten her or take her to court.

Do we need to open an estate?

Q: Our dad passed Mar 7 and mom on March 13. An insurance policy needs to be paid to my sister and I. Do we need a Small Estate? No real estate involved. Bank accounts have been closed. They were both in an assisted living facility and most of their estate was spent on their care. The insurance company is insisting we need a Small Estate Affidavit. The insurance policy was issued by Dad’s employer in the amount of $2150. We do not want to probate the will for this small amount. What do we need to do and can we do it ourselves or do we need an attorney? Since our mother died so soon after our dad and we had no time to have the insurance paid to her, is this complicating the issue? Their will names my sister and I as co-executrices. (Pittsburgh, PA)

A: If there are living beneficiaries on the policy, the proceeds can be paid directly to the be beneficiaries without court or lawyer involvement. If the named beneficiaries are deceased, then the insurance company will only release the money to the estate. If the amount of the proceeds is under $11,000.00, section 3101 of the PA Probate, Estate and Fiduciary Code allows the insurance company to pay certain next of kin directly, without opening an estate. The insurance company may be from out of town and not know PA law. If you show them the statute, they may change their minds. If they still will not release the money, you can have an attorney file a small estates petition in Allegheny County as there are assets under 25k and no real estate. It may be a long shot, but some insurance companies have allowed me to obtain such proceeds with a document they have or which I craft if necessary, titled, Waiver of Probate and Release.

Are insurance proceeds reported on an estate Inventory?

Q:  Are life insurance proceeds paid to a beneficiary need to be listed on the Inventory for probate?

A: Generally, in Pennsylvania, insurance proceeds, if payable to a living beneficiary, are not part of the estate and therefore do not appear on the estate Inventory nor are they subject to inheritance tax.