[WSBAPT] Custodianship for Insurance Proceeds?

[Douglas Bratt]

Hello:

I agree with Marcus.

I had a somewhat similar case about three or four years ago.

Facts:  Divorced couple.  Father had named kids as beneficiaries on life insurance.  (But the difference was that there was no requirement in the Decree of Dissolution that he HAD to provide the insurance.)

We looked at the situation and the only reasonable alternative was a Guardianship of the Estates of the three children.  [Among other things, that was the only way to get the insurance proceeds paid out by the insurance company, as the kids were the named beneficiaries.) But we were able to get mom reimbursed for some expenses from the proceeds that related not only to the funeral (there were no other relatives of the Decedent willing to pay for funeral and there was no other money to pay for funeral, so mother funded it, later asking the court for reimbursement on the basis that the kids really needed a burial plot as part of their adjustment to life without dad, particularly given the fact that his death was by suicide), but also related to “special” expenses over and above what Social Security for the kids was able to pay for.]

And, that is the additional point:  I predict that Social Security will be paying the mom upwards of $2,000 to $3,000 per month for the kids, if the Decedent was earning decent money (which I suspect he was, if he was required to provide that much insurance to cover child support).  I cannot see the court considering it reasonable for mom to get another $3,000 per month out of the life insurance proceeds, and the monitoring involved in a Guardianship would protect the funds for the kids, while still allowing for application to be made for special expenses, as in my case.

Just my thoughts given my similar case.

Best Regards,

Doug Bratt


Douglas J. Bratt
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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Marcus Fry
Sent: Thursday, February 01, 2018 9:27 AM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] Custodianship for Insurance Proceeds?

Sara:
I think your answer depends on the court.  However, given the fact that the mother is relying on the insurance proceeds to provide for the children (I am not saying she shouldn’t be supported given the death of their father), I could see a court having a hard time relinquishing the protections that the guardianship is providing to the minor children.  Now, if you had a 3rd party available to serve, that might be more acceptable option with a custodian.

Marcus J. Fry
Lyon, Weigand & Gustafson, P.S.
Yakima, Washington
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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Sara M
Sent: Thursday, February 01, 2018 9:14 AM
To: wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Custodianship for Insurance Proceeds?

I would like to get feedback from attorneys who have set up custodianship for minors that are beneficiaries of insurance proceeds.

Here's the scenario:

Father dies several months after divorce.  Three teenaged children are beneficiaries of insurance policies of about $250,000/ kid.  Father agreed in divorce decree that he would have insurance policies to cover lost child support if he dies.

Another attorney set up this as a Limited Guardianship of the Estate for the Mother.  Court allows total of $3000/ month to come from children's insurance money for child support.

I took over the case after the guardianship was set up to help with reporting.  I am preparing for annual report, but wonder if this should have instead been set up as a Custodianship under RCW 11.114 in the first place.

The Guardianship can work, but it requires more reporting/ bonding/ attorney work to gain access to the money for the kids support.    Mother and client is a friend of mine, totally trustworthy, and won't be running off with the kids money.

RCW 11.114.060(2) says a family member can request the court to establish a custodianship.  RCW 11.114.140 authorizes the custodian to use the property for the benefit of the minor without court order.

How would you handle this one?

Sara McCulloch


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