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RONB-ESQ
RONB-ESQ, Attorney
Category: Estate Law
Satisfied Customers: 357
Experience:  Right of Way Manager at Access Midstream Partners, LP
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My son died. beneficiary of minor child could not be

Customer Question

My son died. beneficiary of minor child could not be verified. life insurance went to next of kin that is on ssi. if minor can be established am I liable for the amount paid? also I did open an account in the minor child in her name. put some moneys in a cd for her future. what penalties am I faceting.
Submitted: 1 year ago.
Category: Estate Law
Expert:  RONB-ESQ replied 1 year ago.

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First let me say how sorry I am for your loss as I can't even imagine how hard that would be to deal with for me.

Could you give me a little more background? Was your son an adult when he passed? When you reference beneficiary are you referring to giving money/property your son owned to his child and/or setting up an account for his child? What state did your son live in at the time of his passing? Was he married and/or how many children did he have if any and what were the children's ages? Did he die with a Will in place? Has there been any probate proceeding (court proceeding to determine where son's assets should go?)

Customer: replied 1 year ago.
my son was 37. they call it a brain bleed. And his heart was no good. I was referring to give the money to his daughter. her mother has a drug problem. did not want them just to get money. cause is wouldnt go to abby. life insurance was only 10. thousand. she is the only child he had. because Im on ssi and ssd my opions are claming the full 10 they can stop payment for a year. I get 8 thousand for the year from ssi. just enough to screw me up. LOL SS denied abby as his because there was no proof. but my son accepted her as his so i wanted to give her money for her furture. there are no other assets. they were not married. im in Ca.
Expert:  RONB-ESQ replied 1 year ago.

So if I read this correctly you received $10K as his beneficiary on the life insurance. Then when you got the check, you opened an account for her benefit? Is she 18 years old or older? If not, did you open the account with yourself named as the custodian or does she have a guardian other than the mother that you put in charge of the account? I copied and pasted the UTMA definition as if the daughter is a minor this is how you would typically setup the account with either you, her guardian or another adult as custodian:

DEFINITION of 'Uniform Transfers To Minors Act - UTMA'

An act that allows a minor to receive gifts such as money, patents, royalties, real estate and fine art, without the aid of a guardian or trustee. Under UTMA, the gift giver or an appointed custodian manages the minor's account until the latter is of age (usually 18 or 21). The Uniform Transfer to Minors Act also shields the minor from tax consequences on the gifts (up to a specified value).

When you mention penalties what penalties are you speaking about?

Customer: replied 1 year ago.
she is a miner . so I can be the custodian without penalties from ssi/ssd?
Customer: replied 1 year ago.
as of now there is no proof that abby is my son's blood. but if in the future DNA has been established. and the account doesn't have the full 10 can there family sue me for the missing amount
Expert:  RONB-ESQ replied 1 year ago.

The second question is easier. You were the beneficiary so you can do whatever you want with the money, give it to her, keep it, etc.

The other question is harder. I just say that because it is probably not the answer you wanted to hear, but I have a professional obligation to provide you the most accurate information I can so that you know your rights and can act on them.

For purpose of SSI, you are require to report this inheritance to social security. Since you are the named custodian you have the ability to take the money out of the account as well so it would likely not only be a resource received in just the one month, but an ongoing resource at your disposal. I don't know your situation, but it may affect your health insurance if you receive Medi-Cal in California. It appears that it would likely cause you to become ineligible for SSI for a period of 5 months. If someone had applied to probate your son's estate you could have disclaimed the inheritance (said I don't want it) and it would have passed to his estate and been distributed to his other heirs. To be honest though, for $10,000 it would really not be worthwhile to pay an attorney and go through the probate process.

I don't know if the insurance company will report this distribution to the IRS, but it is likely even though the funds are typically not taxable to the beneficiary. If they asked you for your social security number then it is more likely they will report it on some 1099 form at year end. Though you would prefer something different you may wish to report this to social security and then utilize the funds yourself to cover any period where you are not eligible for SSI. If you do report it to them and they say something like don't worry about it then you need to confirm at least that conversation with the SSA representative/employee either by means of a log of who you spoke to and date/time or a follow up letter just saying that on x date I advised you that I received $10,000 and placed it in an account for my son's daughter and at that time you told me that my eligibility would continue. This may not prevent them from coming back at some time in the future to seek reimbursement, but it would prove that you attempted to comply with the law and report the income.

I found this article that may be helpful http://www.oneskyservices.org/files/library/sp_needs_trust_kitchen.pdf

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Regards,

Ron

Expert:  RONB-ESQ replied 1 year ago.

It is my goal to provide you excellent service and do my best to fully answer the question you posted. The only way I get any credit for my answer is if you give me a positive rating between good-excellent. I would truly appreciate you taking the time to go back and review my answer and give me feedback. In the event you don’t feel like I answered your question please reply so I have an opportunity to fully answer the question you asked. In the event you have already provided feedback and I missed it Thank you and please disregard.

Regards,

Ron

Expert:  RONB-ESQ replied 1 year ago.

I hope that I have answered your question if not please reply here and I can answer follow up questions you have or clarify something I have already said. Thank you in advance for positive feedback so I am credited for the time I spent answering your question.

Ron