I have recently found out that my son's grandmother has left close to 80k in her insurance policy- ostensibly to me but 'for the benefit of... (my son). (this is my ex-husband's mother). My son turned 18 this feb , a month before my (ex) mother-in-law's death. Do I have any say in how or when this sum is distributed? My son is not very responsible- has in one month already gone through all his high school graduation $ and I can just imagine what he will do with this huge sum.

He is not very observant and prob would not know what or how much money that I have received for him but I want to do the legal right thing and know what my options are.

thanks in advance,

Carol

Have the estate attorney, place the money in a trust fund limiting the withdrawn to interest only or a set time and amount

Hello c:

I don't think you can stop him. He's an adult, and it's HIS money. My son went through $150K after his mothers death, and there wasn't a thing I could do about it.

excon

PS> I just saw the "ostensible" part. If you are named, then forget what I said, and listen to Mr yet.

How is the beneficiary named?

Is it "beneficiary: Cetch1, for the benefit of minor child Cetch2"?

This is an important point. If this is the case, then more than likely, you are the beneficiary, not your son. You will need to confirm this to be the case in your state (statutes). I bet that it is the case.

This is a sign that your ex-mother in law trusted you very much. Naming another person as a beneficiary for the benefit of a minor child is the easiest way to attempt to provide for a minor, but it relies on the person named as beneficiary to be trustworthy. I gather that you are trustworthy, given your concern is management of the funds, and not purchasing that 80,000 G-Class Mercedes. ;) With this small (relatively speaking) of a payout of benefits, most insurance brokers will advise that a trust will cost more to maintain than the benefit gained from having a trust. Also, because your son is 18, the Uniform Transfer to Minors Act won't benefit you, unless the age of majority in your state is 21, in which case it may benefit you.

I recommend contacting an estate planning lawyer for a brief consultation. It may be as easy as you setting up an interest-bearing account that distributes funds to your son at set times. (a form of trust you manage through your bank.)

However, because you are the named beneficiary, your ex-mother in law has unwittingly created a minor tax problem. Unless the funds are given for a purpose that does not incur gift tax (education plus room and board, major medical), you can only give him $10K per year without incurring tax.

Talk to a probate attorney. Probably there's not much you can do since your son is 18. Unless your ex mother-in-law designated the money for a specific purpose, such as a college education, then it's pretty much fair game for your son to do with as he pleases. "For the benefit of..." is far too vague and global for any court to interpret otherwise. Though he may be "irresponsible" in your opinion, that will carry virtually no legal weight concerning the execution of your ex mother-in-law's estate.

Yes, good luck, I hope you have better luck than I did. But if it was left to you ( named specific) to be used for >>>> . You may well control the money, or at least make him sue you for it. I would have an attorney look at it.

My son got a large amount of money at his 18th birthday from a trust, I tried to stop it, make it stay till he was 18, make it come in payments, but no, they gave him a check. ( well he had already borrowed against part of it. After a fancy car ( that was lost or stolen or something) within a year, it was all gone, everything, at 19 he was homeless with nothing.

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Originally Posted by s_cianci

Talk to a probate attorney. Probably there's not much you can do since your son is 18. Unless your ex mother-in-law designated the money for a specific purpose, such as a college education, then it's pretty much fair game for your son to do with as he pleases. "For the benefit of..." is far too vague and global for any court to interpret otherwise. Though he may be "irresponsible" in your opinion, that will carry virtually no legal weight concerning the execution of your ex mother-in-law's estate.

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Life insurance is technically outside the estate and will not be subject to probate. It is counted as part of the estate for tax purposes only but not otherwise controlled by the estate. The only thing that controls is who is named as the beneficiary. If it is Cetch1, for the benefit of... the insurance company reads no further than Cetch1, issues a check to her, and tells her nothing about how to spend it.

The whole "for the benefit" is based on trustworthiness of the beneficiary. It is a promise to have the money be for the child, but not a legal obligation to give it to the child. The insurance company can't enforce how the money is spent and neither can the estate. Now, if she gave him anything under the will, or died intestate and he is among her heirs able to make a claim on the estate, she has no rights to control anything he gets that way.

Actually, I read the original post a little too hastily the first time and failed to notice that the $80K in question was proceeds from an insurance policy. That does change the picture a little bit. Of course, the OP's son who is the ultimate beneficiary could sue her to hand over the money to him and, at age 18, would probably have a pretty good case.

Quote:

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Originally Posted by s_cianci

Actually, I read the original post a little too hastily the first time and failed to notice that the $80K in question was proceeds from an insurance policy. That does change the picture a little bit. Of course, the OP's son who is the ultimate beneficiary could sue her to hand over the money to him and, at age 18, would probably have a pretty good case.

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Acknowldeged, but she is the third party beneficiary, and he is a promissee. Under contract law, it is almost impossible to force a gift. Technically, that's what this would be.

See, now this is why I love being a lawyer. We each look at things ten ways to Sunday, and each of us has a different take.

Everyone should arrange a trust so that their children will not inherit a large sum of money all at once when they turn 18. Very few 18-year olds are responsible enough to manage money. Arrange so that they get a fixed amount every year until they turn 25 or 30. Hopefull by then, they will be mature enough to handle it.

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Originally Posted by cetch1

I have recently found out that my son's grandmother has left close to 80k in her insurance policy- ostensibly to me but 'for the benefit of ......... (my son). (this is my ex-husband's mother). My son turned 18 this feb , a month before my (ex) mother-in-law's death. Do I have any say in how or when this sum is distributed? My son is not very responsible- has in one month already gone thru all his high school graduation $ and I can just imagine what he will do with this huge sum.

He is not very observant and prob would not know what or how much money that I have received for him but I want to do the legal right thing and know what my options are.

thanks in advance,

Carol

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This is interesting. Of course, the exact language of the insurance policy (I'm assuming life insurance?) will determine who the money goes to. I think your saying that the policy was created when he was a minor, and now he is an adult, right?

If this is the case, now that he is an adult, he has full legal rights to the full sum. Really though, I wouldn't get too much in a twist about it. Be happy that your son now has money he can use for college, and now he can devote more time to school now that he doesn't have to work through college. If he blows the money, he is no worse off than before. Maybe you can talk him into investing some of it, and also help him pick out colleges.