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YOUR FURTHER QUESTION:

ok, my mom died one year ago, my dad died sat, his insurance policy made mom the beneficiary, the will leaves everything to my sisters and me, we are trying to cash in the insurance policy and getting told we need the form that doenst fit the situation, the small estate affadavit. so we are going to have to go to the probate court from the looks of it, which i dont understand since there is a will. do you concur??

 

FURTHER ANSWER:

 

Yes, I concur. And the additional information you have now provided is most relevant.

 

First, my condolences, of course, on the passing of your father.

 

Next, as to the insurance matter: Upon the death of the insured person (the "life insured"), the insurance company is required by contract law to pay the policy proceeds in accordance the policy's beneficiary designations existing at the time of the death of the insured person. A beneficiary designation is the means by which the owner of a life insurance policy (in this case, your father) tells the insurance company what to do with the insurance money (the policy proceeds) following the death of the person whose life was insured.

 

If the designated primary beneficiary is alive at the time of the death of the person whose life was insured, there is usually no problem. The beneficiary simply submits to the company the appropriate form of Claim of Loss (each company usually has its own form for this purpose) along with a certified copy of the decedent's death certificate (and perhaps the original insurance policy itself if available). If the primary beneficiary has predeceased the life insured (as appears to be the situation you are presenting), the Claim of Loss would be made by the designed secondary beneficiary (or beneficiaries). Again, no problem.

 

But what happens if the primary beneficiary has predeceased the life insured and there was no secondary beneficiary designation (or the secondary beneficiary has also predeceased the life insured)? What happens then?? Who is entitled to the insurance proceeds? And how does the insurance company know what to do with the insurance proceeds? The insurance company does not claim the money for itself. The company recognizes that it is legally obligated to pay out the proceeds but the company wants (and needs) to know that when it does do, it is paying the money to right person, in accordance with law, and that the company will have no further legal liability once the payment is made.

 

Given the facts you are presenting, I suspect that your father designated your mother as primary beneficiary and made no provision designated a secondary beneficiary. And after your mother's death, your father did not file with the company (as he could and should have done) a Change of Beneficiary form. Thus, at the time of your father's death, there is no surviving designated beneficiary, either primary or secondary. This is not an unusual situation. It happens all the time. So as to deal with this situation and avoid confusion, life insurance policies routinely include a provision that saying that in the event there are no surviving designated beneficiaries at the time of the insured death, the company will pay the policy proceeds to the "Estate of the Insured."

 

But when this situation arises, the company faces yet another problem. Specifically, just exactly WHO is the "Estate of the Insured"? To whom does the company send the check? The insurance company has no legal authority and is not in a position to make its own independent determination. (And this is true even if the decedent had a will.) The insurance company wants to pay to pay out the money but also wants to be sure that when it does so it is "off the hook" and has no further legal accountability once the payment has been made. (Thus protecting itself against anybody coming in after-the-fact and claiming that the company made an erroneous payment.)

 

So when there are no surviving designated individual beneficiaries and the company is going to pay the policy proceeds to the Estate of the Insured, the company will make the check payable, for example, to the "Estate of XXXX XXXXX, Deceased." OK so far. But to whom should the check be sent? And what legal authority does the person receiving the check (whomever it may be) have for endorsing and cashing the check? What happens if several individuals each claim entitlement to the proceeds? How is all of this to be sorted out and resolved?

 

This is where "probate" enters the picture. For legal purposes, a decedent's estate acts through a "personal representative" (a "PR"), also known in some states as an "executor of the estate." A PR is a person APPOINTED BY THE PROBATE COURT and given legal authority to act on behalf of the estate in all matters pertaining to the management of the estate, doing so under judicial supervision.

 

It is anticipated that once the money is paid to the "Estate of the Insured," the money will then between distributed to the particular individuals who comprise the beneficiaries of the decedent's estate as determined by the terms of the decedent's will (testate succession), if the decedent had a will, or to the decedent's lawful heirs if there was no will (intestate succession).

 

In your situation, what you really need to do (as earlier suggested) is to at least confer with a Michigan probate lawyer regarding this matter. The law involving decedent's estate can be very complex, at least to persons who do not have legal experience. (Just as auto mechanics, or heart surgery, is very complex to those, like me, who do not have any auto mechanics, or surgical, experience. So that is why I take my care to an auto mechanic if I need new brakes, or take myself to a surgeon if I need surgery. I suppose I could TRY to do it myself, but I know I would probably screw it up.)

 

So when you consult with the Michigan probate lawyer, I suspect the lawyer is going to tell you that your father's estate does not qualify for "small estate" administration because real property (land) is involved. Further, under the facts of your case, what you will need to do is to apply to the probate court for "informal probate" (as opposed to "formal probate") and for the appointment of a personal representative. This is accomplished by filing the original will with the Probate Court along with an "Application for Informal Probate and/or Appointment of Personal Representative (Testate/Intestate)."

The form for this is available online at:

http://courts.michigan.gov/scao/courtforms/estatestrusts/pc558.pdf

 

This triggers the necessary legal procedures that will result in the appointment of a PR who will then be provided with a court document called "Letters of Authority." And when all of this has been done, the PR will then file with the insurance company a Claim of Loss, asking that the insurance company pay the policy proceedings to the "Estate of _________, Deceased, by __________________, Personal Representative." Upon receiving the check the PR will then be able to lawfully endorse the check (doing so on behalf of the estate) and deposit it into a special "decedent's estate checking account" that the PR will have hopefully already established.

 

Most of the various Michigan probate forms are online at:

http://courts.michigan.gov/scao/courtforms/probate/gpindex.htm

 

And a good overview of the entire process is explained at:

http://courts.co.calhoun.mi.us/notes000.htm

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Expert:	Lawrence D. Gorin
Pos. Feedback:	97.0 %
Accepts:
Answered:	11/5/2009

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