News

The Moneyist: ‘She had a will, but it was null and void’: My friend and her sister are fighting over their mother’s life-insurance policy and checking account. Who should win out?

Dear Quentin,

My friend’s mom passed away about a year ago. She had a will, but it was null and void because there was only one witness signature. She has two daughters. One of the girls, Mary, moved into her home and started driving her car, etc. 

Their mother had a $32,000 joint checking account with her best friend. The friend signed this account to Kelly, the other daughter. Kelly tried to work with Mary on splitting everything (home, contents, car and money) right down middle after paying all the bills. 

Mary would not agree on anything because she wants everything. So Kelly spent the money, and now Mary is taking her to court. Mary still lives in their mother’s home, and their mother’s car was repossessed because she could not pay the loan, and she also wrecked it.  

She spent a life-insurance check for $10,000 that was supposed to pay for the funeral. And Kelly’s lawyer dropped her when he found out she spent that money. That life insurance and checking account was never supposed to be part of the estate. Do they have a case?

Concerned Friend

Dear Friend,

A person’s death should not be an opportunity to reenact an episode of “Supermarket Sweep” where the beneficiaries run through the aisles grabbing whatever they can. The fact that your friend’s mother’s will was null and void does not mean it’s a free-for-all for one or both daughters. They risk displaying not only a lack of decorum, but also a disregard for the letter of the law.

When somebody dies intestate — without a valid will — their estate goes through the probate process in accordance with state law. The probate court will take an accounting of all the assets in the estate: real estate, life-insurance policies, bank accounts, furniture and jewelry. These assets will then be distributed to the beneficiaries — in this case, the two daughters.

The life-insurance company will have a named beneficiary: presumably, either one or both of the daughters if the coverage period has not been exceeded and the premiums are current. Those proceeds will be payable to the named beneficiary or beneficiaries upon proof of death — typically, a death certificate. Then a claim form is submitted to the life-insurance company. 

Who inherits the money from their mother’s checking account would depend on the kind of joint account. If your mother was the owner of a joint-tenants-in-common bank account, the balance would be transferred to her estate. If the account was joint tenants with rights of survivorship, the money would go to the co-owner, rather than the next of kin of the deceased.

What you have described is an unholy mess, but more importantly a fundamental misunderstanding of the probate process. The probate court should appoint an administrator to oversee the estate as there is no valid will. The administrator will then determine what remains of their mother’s estate and will distribute the proceeds equally between the heirs.

Yocan email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

The Moneyist regrets he cannot reply to questions individually.

More from Quentin Fottrell:

• I live with my girlfriend, 59, who owns several homes and has saved $3 million. I pay utilities and cable, and do lots of repairs. Is that enough?
• ‘He is the most computer-illiterate person I know’: I was my husband’s research analyst, caregiver, cook and housekeeper. Now he wants a divorce after 38 years.
• ‘Our friends always yearned for a relationship like ours’: My husband of 16 years left me for another man. I don’t want them to live in our properties. What can I do?

What's your reaction?

Excited
0
Happy
0
In Love
0
Not Sure
0
Silly
0

You may also like

Leave a reply

Your email address will not be published.

More in:News