Home Forums Hunting & Shooting Hunter's Campfire We are not lawyers, but are playing one for our buddy.

So the guys wife dies and leaves the life insurance to the only child. The parents were divorced. Nearly identical situation to mine actually. The Life insurance was 100k

The grandparents were named executor of the kids estate it's just a baby. They took control of the money and instantly withdrew 35,000 bucks for money the mom owed them for stuff she bought or borrowed over the years.

The Kid was the beneficiary to this life insurance, not the wifes estate. At least the way I understand this, the money belongs to the kid 100%, the grand parents cannot pay the moms bills, or themselves back. Tough luck on that personal loan as far as I can tell?

The other guys are telling me that as the estate is managed by the grandparents they have the decision making power to do whatever they want with the money. I don't think so because they were not named executors of an estate, they were names as the executor of the kids life insurance,.... for the kid. The kid owns all that money not the estate.

Anyone understand this kind of legal crap? ( sadly we are more interested to figure out who is right about this than the actual outcome.)

I say they will have to pay that money back to the account, and I strongly suggested that the dad get a guardian at leitum to go to court on his behalf to make him the executor for his son. The grand parents seem to me to be crooks!

I don't know the law but I know right from wrong.

if the facts stated are correct the grandparents are in the wrong. whether the "law" backs that position up or not is irrelevant to me. poor kid

It sounds like there is a trust for the kid with the grandparents as trustees. As such, they have a fiduciary duty to the child.
I agree with your interpretation but they're going to get away with whatever they want to do unless you're friend hires a lawyer and files suit to remove them as trustees or something to that effect.

They might also be guardians of the child's estate as well. They have answer to the court in the form of annual reports if so, but once again no one is going to give these reports a second look if they even bother to do them unless there is something at controversy and the only way to do that is to hire a lawyer.

There are a couple of things going on here, but your thinking is pretty accurate.

First, there is the issue of the mother's Will...if she had one. If she left assets to her minor child through her will (this would not include the life insurance policy), she probably named her parents as her executor. Her Will could have had a clause that creates a trust for her child upon her death, and named her parents as the trustees, but I'm going to guess that she probably didn't have that level of estate planning. If the parents had an actual loan with their daughter at the time of her death, such as a signed note, etc., they could make a legit claim against the estate...again this wouldn't include the life insurance. Of course I could be wrong, but it sounds like the daughter didn't have much, if anything, except the life insurance policy.

Let's put all of that aside...and focus on the life insurance. Life insurance is paid to the named beneficiary, outside of the deceased's estate. That means that this is the child's money, period. I am surprised that the life insurance company didn't issue the check to a uniform gift to minors account, for the benefit of the child. Life insurance companies are usually pretty cautious about how they issue checks for minors.

Does the child reside with the father, or do the grandparents have custody? I am curious as to why the grandparents have taken control of this money. They may have been named as an executor of their daughter's Will (if she had one), but this wouldn't automatically apply to them having control of the child's bank account. The parent is normally the legal guardian and would set up an account like this, but that isn't always the case. As far as the grandparents taking money from the proceeds to repay themselves, that is a problem. If they are acting in a trustee capacity for this child, they just stole money from his account. Let's assume that they aren't trying to be scumbags and that they think they have a legit right to that money. They don't...they might have had a claim against the estate, but that wouldn't apply to this money. They absolutely should pay it back, they could also be sued for it.

Your thoughts are spot on regarding the appointment of a guardian. I don't know why the father isn't already the guardian, but that could be for a variety of reasons. He can bring this to the court's attention, the judge will likely see that the grandparents breached their fiduciary duty to the child and will appoint someone, probably a lawyer in town, to be the trustee for the child's assets. Under the circumstances, that is probably the best thing that could happen. Otherwise, I have a feeling that this child won't be seeing very much if anything in the future.

At a minimum, the grandparents will have to account for how they spend the "child's money." As has been stated, the grandparents cannot take $35k of the life insurance proceeds to pay their daughter's debt to themselves. The money belongs to the beneficiary. As a minor, the beneficiary cannot receive the funds. The grandparents are a bit unscrupulous in my book. It sounds like their was some animus between the grandparents and their daughter. The life insurance company did not do its due diligence before paying the proceeds. A good lawyer might find a way to go after the life company for paying the funds to the grandparents but that's a long shot.

The situation shows why you never name minors as the beneficiary on a life policy.

Most simple wills will set up an UGMA/UTMA trust. I suspect that being divorced, the decedent named her parents as trustees instead of her husband. They might also be guardians of the estate of the child if the child's only assets are that trust.

The state should have a probate court, insurance commission, victims advocate, minor protective service, governors advocate, or maybe just the fraud investigation branch of some police agency. Colorado has the governors advocate who will steer you in the correct direction. What I have seen in my limited experiences is they get VERY interested. Make a few phone calls and get someone who knows the laws there involved right away.

20 bucks says they ain't done hittin that.

In MOtown courts, the grandparents would have to account for every penny of the money they spent.

Had some friends that took in a couple kids with some type of SS income.

They had to account every year for where the money went.

i worked 20 years in Financial Services. From what you described the grandparents could be held both criminally and civilly liable for their actions. If I was the dad, I'd begin with a lawyer to craft the civil complain, then issue a criminal complaint as a motivation for them to make things right with a minimum of fuss.

I have a real dislike for people who disrespect the property rights of minors. I wish your friend the best of luck.

That's probably true but it would cost thousands to win it in court. In the end everyone will lose but the attorneys. I say let the grand parents keep what they lost to the daughter (funeral expenses at least) and hopefully they will invest the money wisely and in the end the kid will get the 100k. Hopefully the father will watch over the grand parents to make sure it happens that way.

kwg

The very young kid lives with the dad, he struggles to work and have daycare and just the general quality if life to manage being a single guy with a complicated job with travel and now having all the responsibility of the kid in the mix.

There was a will but it just said the money could only be used for education and health care until the kid is 25 years old. then she gets the balance. The Grandparents clearly don't like the X son in law and will not get him financal help with this money. My opinion is that the grandparents will just continue to use this as they see fit and the little girl will have nothing left at 25.

One of the fellas in this friendly debate/ conversation said that he thinks the manager of the estate can legally draw a salary from the balance as needed to manage the money? The father of the daughter also mentioned that the grandparents were boasting about investing the money in canadian gold Maple leafs.

I have no idea what that is about or what kind of investment that is?

Its a little tough to make the call. Her Will set up a testamentary trust for the benefit of the child and named the grandparents as the trustees, but that normally wouldn't matter in this case because the insurance proceeds passed (we think) directly to the beneficiary (the child) outside of her estate. If that is how it happened, the Will, and the trust formed for the child inside the Will, wouldn't cover this asset.

The only way I can see that the grandparents got control of this, rather than the father, would be if the deceased woman's estate was listed as the beneficiary on her life insurance policy, and not the child directly. It would also strengthen the claim the grandparents might made for reimbursing themselves for some debt that the daughter owed them. The child would receive the money, or the balance remaining, but she would receive it through the Will, and the trust would be formed for the benefit of the child until she hits 25, with the grandparents as trustees. The father could still intervene and could probably even get the grandparents removed as trustees, but the reality is that these things take time, and money. The biggest problem with having family members serving as trustee is that you can't always trust them.

I doubt it would go to court if in fact the Grandparents had no right to the money. Reason being the Grandparents attorney would likely instruct them they will lose and depending on the State they may be liable for both parties attorneys fees and have to pay back the money anyway. If it ended up anywhere it might end up in some sort of mediation if it is a clear cut case. But what the heck do I know.

I would have already called the police as I don't think this sounds legal.

I think others have said this but....

Get a Lawyer involved. Life insurance proceeds are not an 'inheritable' asset, they are wholly owned by the beneficiary. The proceeds of an Insurance Policy are not part of the 'Estate'.

WHO is the childs guardian now that mom has passed?????

If it is dad, I would think that he has recourse to recoup the money TAKEN from the child.

GET a Lawyer................

Yeah, I know life insurance passes outside the will but you dump the life insurance into the trust. Further, like I said, it is entirely possible that they are guardians of th the estate of the child. It isn't hard to dump life insurance into the UGMA/UTMA trust. You just make it the beneficiary of the policy.

As for a trust only being a piece of paper, that is what I said in my first post. They are going to do whatever they want until he files and gets it before a court.

Oh, and there was some level of planning or the father would be the trustee.

+1,kid will be lucky to get anything,get a lawyer quick.

Whether it's legal or not the grandparents should be ashamed of themselves.

It wouldn't be hard at all, if the mother made her estate the beneficiary of the insurance policy, rather than the child. But she would have had to be the one to do it. Then the insurance money would have passed through her estate. Then the testamentary trust created by her Will would work just like it appears to be working right now. If that's the case, there wouldn't be the need for a UGMA account. UGMA accounts are set up when no trust is formed. Sort of a "poor man's" trust.

If the child was the beneficiary, the check would be issued to the child's guardian through a UGMA account, but it would be the father that would be the guardian, not the grandparents. If I had to take a guess, I would say that the mother made her estate the beneficiary of the policy, not the child directly. That would be why the grandparents are controlling the money.