[WSBAPT] Insurance proceeds - no named beneficiary - messy family fight!

Fri Mar 30 16:37:44 PDT 2018

Since I practice primarily in Oregon, I cannot give you a definitive answer, but I do have a suggestion.  Try to figure out how to avoid an interpleader by the insurance company.  See if you can get the controversy at issue in a court and the competing family members put on notice that they must contest the issue (if at all) in that court and in no other.  Then write a letter to (or call) the insurance company and assure them that all of the family members will be bound by the pending matter and that an interpleader is unnecessary, and thus the insurance company should sit tight and wait for the resolution of the pending matter and the binding nature of the pending matter.
The reason:  the insurance company gets to take their costs and attorney fees out of the proceeds of the policy.  Ouch.  And the attorneys for the insurance company will have no motivation to economize on their fees, since their client is not paying those fees out of its own pocket.  Ouch.  The fees are being paid out of your client's pocket.  Ouch.  You need only two attorneys, not three.
The post immediately below mine suggests using an interpleader.  That might be right if circumstances point you in that direction.  But if circumstances do not point you to an interpleader, try to avoid it.  The last time this happened to me, I got the matter into the probate court as fast as humanly possible, I then gave notice to all of the competing parties, and I convinced the insurance company to sit tight because all of the competing parties would soon be bound.  They were happy to comply, since it was an easy thing for them to do (i.e., sitting still).  Your insurance company is presently sitting tight.  Try to keep them that way for as long as possible.  If need be, threaten them by telling them that an interpleader would be a waste of (your) money, and you will hold them responsible for wasting your money.
You can tell that I feel strongly about this.  But if others have differing views, I am willing to be educated to the contrary.  I learn something new every day.
Phil Jones
Portland, OR

Philip N. Jones |Duffy Kekel LLP
111 SW 5th Ave, Suite 1500, Portland OR 97204
(503) 226-1371 (main)| (503) 226-3574 (fax)
pjones at duffykekel.com<mailto:pjones at duffykekel.com>

From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Jane Bitz
Sent: Friday, March 30, 2018 4:18 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Insurance proceeds - no named beneficiary - messy family fight!

I had a case where a parent died with two minor children (age 14 & 16) and an ex-spouse named as beneficiary to his life insurance. The insurance company filed an interpleader case with the funds paid into the Court in the County in Washington where the decedent had lived. The action was separate from the probate his estate. We were able to have ex-spouse appointed to administer his estate (he was intestate and his family members declined to serve as PR). She Petitioned on behalf of her sons to establish uniform gifts to minors accounts for their shares of the life insurance after payment of the expenses of  the interpleader action, probate, funeral, burial etc. A GAL was appointed on behalf of the children who recommended the UGMA accounts for the disposition of the funds. The accounts were blocked by Court order until the children turned 18. Mom or children can Petition to release funds for a specific purpose.

You could contact the insurance company to see if they would be willing to interplead the proceeds in your county or the county where the adult child was domiciled.

Jane G Bitz
Of Counsel
Wolff, Hislop & Crockett, PLLC
12209 E Mission, Suite 5
Spokane Valley WA 99206-4824
(509) 927-9700; FAX (509) 777-1800
jbitz at whc-attorneys.com<mailto:jane at jbitzlaw.com>
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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of G. (Gus) Benjamin Lindsey III
Sent: Friday, March 30, 2018 1:51 PM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Insurance proceeds - no named beneficiary - messy family fight!

Good afternoon,

New one for me. PC's adult child died intestate, leaving behind a minor child. (Grandchild of PC) The deceased child was believed to not have any real assets so the family has not opened probate. In fact the main issue has been over custody of the child. (After the death, the other parent came to Washington and took the child out of state.) The other state apparently grants broader custody/visitation rights  to grandparents than Washington does so the PC and the child's father are litigating custody in the other state. (Allegedly the father has some substance abuse issues.)

The wrinkle is that PC has now learned that the deceased child had some type of life insurance policy that failed to list an heir. (I have advised PC to request the actual policy.)

The policy is estimated to be worth about 100K. Before contacting me, PC tried to make a claim directly with the insurance and learned that the "other parent" is also seeking the money on behalf of decedent's child. (The father and decedent were never married.)

Under intestate law, the minor child would be the heir. As a minor, a custodian would need to be appointed. PC wants to ensure that the money does not end up in the hands of the father, believing that he will simply blow it. Additionally, the PC paid over $15,000 for a funeral and wants compensation.

PC could move to open probate and then file a creditor claim, assuming that insurance money truly is in the estate. The insurance has indicated that it is on hold to see if the PC and the father of the child can work it out. (doubtful, they hate each other)

Any ideas/thoughts on the most practical way to address PC's most urgent concerns: 1) ensuring money truly goes for benefit of the grandchild and 2) seeking payment for the funeral expenses(which means PC would be a PR with a creditor claim potentially)

I dealt with a situation where a grandparent left insurance proceeds to a minor and we petitioned to have the parent appointed custodian with the funds going into a locked investment account until the child reached the age of maturity.

Trying to figure out the most effective way forward given the family dynamics. Any thoughts will be appreciated.

Sincerely,

G. (Gus) Benjamin Lindsey III
Attorney-at-Law
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