Do I need a lawyer? Life insurance and crazy siblings

In My Humble Opinion
1

Here is the situation:

My husband’s mother died late last September. The estate was empty–she had no money in her bank account, rented her home, and didn’t have a car–except for $450 that her work paid out for vaction time she didn’t get to use.

There was, however, a life insurance policy for over 100K. My husband was name as sole beneficiary.

Now then, it is our belief that his mother named him as sole beneficiary mostly because she found it easier to write down one name than four (he has three siblings) and that his mom’s wish would have been that that money be divided equally. We informed his siblings that our intent was to distribute the money equally as quickly as we could without incuring tax penalties.

My husband has a sister that I am forced to describe as trashy. She fufills the stereotype to a T: greedy, runs thorugh money like it is water, in and out of jail for petty crimes, and crisises follow wherever she goes: she is always about to be evicted, being beat up by some man, wanted by the sheriff, whatever. She is also (and here is the problem) the type of person who is quick to talk about getting a lawyer when she feels she’s been wronged.

Now then, this life insurance thing is taking some time to process: some of that is because it just does (for example, the bank put an 11 day hold on the check) and some of it is just because this is my first year as a teacher, which means that most weeks I am putting in 60 hours between Monday and Friday. My husband and I are using our share to pay off debt and then saving the rest, so, frankly, I havn’t been exactly rushing to take care of this–in retrospect, this was a mistake.

So anyway, a week or so ago I get an email form the SIL asking “where is the money they came to shut off the water today?!” At this point I still had not consuted a CPA–which I wanted to be sure to do, to avoid taxes and cover everyone’s ass–and so sent her an emergency $1000. I talked to a CPA that day or the next, and more or less got the project started. However, I coudn’t send her the rest of the money because the bank put that 11 day hold on it.

I got an email from her today threatening legal action (amoung other things) to get “her” money. Now then, it is my understanding that there is no legal action to take–there is no will to contest, nor any estate to squabble over. The money came to my husband from a life insurance policy owned by the hospital that his mother worked at.

Now I don’t know what to do. My instinct is to just get her the money ASAP and hope that once she gets the money she sees as “hers” she will go away. My fear is that she could get hers and turn around and sue us anyway. for more, or that she could cause some other sort of mischief.

I guess what I am asking here is whether or not I should go to the considerable trouble of finding a lawyer (which means delaying paying her, which actually increases the risk of her getting her own lawyer) or if I should just get her the money ASAP and hope that is the end of it.

Is it possible that any lawyer would even take her case? Is there any sort of case to be built to make a claim on a life insurance policy that did not name her in any way shape or form?
If I do need to get a lawyer, how the heck does one find a good lawyer? I looked in the yellow pages, and frankly, the ads were sickening (because the worst sort of lawyers take put the flashiest ads, or course).

2

I’m not a lawyer, but as someone who regularly deals with both divisions of real estate (estates) property and human nature on a regular basis, I would say that you needed a lawyer yesterday.

She is both stupid and greedy which means that no matter how fairly you divvy up the insurance money she will feel you have shorted her somehow. You need a major CYA via both a lawyer and accountants input and quite frankly you really need to get the tax impact issues sorted out before disbursing as they are likely to be pretty major. You need to slow way down and structure a way to disburse the money that will maximize the retained amount or else this will potentially turn around and bite you (and the others) taxwise.

If the check is to your husband he should take the time he (and you) need to sort this out most benefically. If she complains have your lawyer send her a letter. Good tax and estate lawyers rarely advertise . Ask your accountant for some recommendations.

3

Thanks, astro.

I feel like I have got the tax issue sorted out: I did consult a CPA (who I pulled randomly out of the yellowpages, but it was a firm in a good part of town specializing in estate taxes) and she told me that as long as 1. The money was put into a community (husband and I’s) account and we each gave no more than $11K/individual/year, then all was kosher regarding taxes.

I don’t have a regular CPA to recomend me a lawyer: last year my husband and I’s combined income was ~17k (we were both students) and Turbotax more than sufficed for our humble needs. But you are right, we probably do need a lawyer. it is just such a monumental pain in the ass (as a teacher, I have to take a personal day and arrange a sub and all this other shit if I want to do anything at all during normal business hours) and it pisses me off beyond belief that I am going thorugh all this trouble in order to give her over twenty thousand dollars. It goes without saying that if she had been the only beneficiary, sharing the wealth would not have been even considered.

Again, thanks for the speedy response.

4

I second astro. IANAL or CPA, but if your husband was named as sole beneficiary and he transfers $25,000 to SIL, she may incur some tax liability, as might the other siblings. It’ll be worth an hour of CPA time to do the disbursement correctly, and worth a consult with an attorney just to forestall future headaches from SIL.

IIRC, you’re relatively new to Texas. My best friend is an Austin attorney. If you’d like, I can see if he knows someone in your area who won’t bleed you.

Good luck.

On preview I see you don’t need the first paragraph, but I typed it, dammit, have it anyway. :wink:

5

Well, if you’ve got the tax issue sussed and there are no estate issues just tell her what the scoop is and that she’ll get 10,000. sometime in the next two weeks and 11,000. in 2003 etc until the total is paid out. If she bitches, let her complain. It would still be worth a few hundred (to me) to have a lawyer give his or her blessing on what you are doing.

6

I’d love the name of a lawyer up here who would be willing to do a brief consult on this situation. One who would be willing to meet fairly quickly would also be nice: I feel like the more I delay, the more likely SIL is to decide we are “scheming” and Take Steps.

Thanks

7

The couple hundred is definitely worth it: it’s the time and the hassle that I resent and am reluctant to spend, if that makes any sense. I just want to know if it is possible to sue saying that you should have ben the person your mother named as beneficiary on her life insurance policy. Because near as I can tell that is the only claim she would have on the money.

8

IANAL, but I am an executor to an estate, so I can claim some expertise.

If your husband is the sole beneficiary, then there is no legal obligation to distribute the policy proceeds to his siblings. If he wants to keep it for himself, there’s not a damned thing TSIL can do about it.

There are no income taxes on a life insurance settlement, so hubby doesn’t have any obligation there. If he splits it amongst his siblings, then any amount over $10k is subject to federal gift tax, and it’s the recipient’s problem to make sure it’s paid.

9

I forgot to add, that estate I am the executor of is subject to Indiana law. YMMV.

10

People can sue for anything, but they usually don’t. Still, we’re talking about sizeable chunks of money, so it might be worth it to consult with someone.

In my opinion, the best way to find a lawyer is to ask people you trust. If you don’t know anyone that has gone through something similar, or has put together a will, there are a number of avenues available to you. Just off the top of my head, you might want to ask someone with the administration in your school (principal, superintendent, secretary in the main office, etc.). School districts get sued often, and they usually have pretty good relationships with attorneys and/or firms. Even if their attorney/firm can’t help you, they probably know someone that can, and would be happy to make a referral.

If that doesn’t pan out, State Bars usually have a referral service. Someone else mentioned that you’re in Texas, so here’s a webpage on the State Bar of Texas’s referral service.
http://www.texasbar.com/public/findlawyer/lawyerref.asp
It includes a telephone number and some relevant information.

Good luck.

11

That isn’t true. You shouldn’t be giving tax advice.

12

Manda JO, I’ll talk to my friend in the morning.

13

Sorry for my previous brief post. I just get so angry when people give legal/tax advice when they have no idea what they are talking about. I know that Manda Jo is too smart to take the bad advice but it still gets me angry.

Here is everything (and more) you ever wanted to know about Gift Tax.
http://law.freeadvice.com/tax_law/gift_tax_law/

14

I think the best advice, considering the amount involved and the threat of a lawsuit, would be to consult with a qualified lawyer in your area and not a message board full of well-intentioned but anonymous contributors. For this reason, I am closing this thread.

15

But not before I tell Manda JO I’ll email her tomorrow.

16

How’s you pick that lock? How’s I pick that “lockdown”?

Wheeee!

17

You’re having too much fun, astro. Sit down and be a good boy.

18

As long as we’re doing a little B&E…

::slips in and helps herself to a lovely vase just sitting around in this thread::

19

The estate was opened in November 2000, before the amount was raised to $11k.

The website you cited also said that the giver was supposed to pay the tax, but if they didn’t then the recipient was liable. I’m certain that also is a recent change in the tax law.

I’m reporting in what my lawyer told me the day the estate was opened. I was wrong by reporting stale information, so sue me.

20

Those aren’t the only two reasons your statement was wrong. Your information is stale, incomplete and just plain wrong. Who is responsible for the tax is not a recent change.

Gift tax is a complicated area which you seem to know very little about. Therefor you shouldn’t be giving tax advice.