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What happens when a revocable trust includes a life insurance policy and is later changed but not the date on life ins. policy?

San Jose, CA |

The life insurance policy has the name of the trust, "Jane Smith Revocable Trust dated 01-29-11" and the trust is changed years later (more than once) each time changing trustees and beneficiaries but a more recent statement from the life insurance company still reflects the older date. Would the last named trustee be entitled to receive the money from that insurance policy simply because that person was named as the sole beneficiary of the estate (with the exception of some personal items left to others)? Is it possible that the original beneficiaries of the life ins. policy would still be entitled to receive the funds?

Attorney Answers 4

Posted

“What happens when a revocable trust includes a life insurance policy and is later changed but not the date on life ins. policy?” Hopefully, the trust was merely amended or restated appropriately so that it always was named "Jane Smith Revocable Trust dated 01-29-11." If so, the current trustee of that trust would be entitled to receive the proceeds of the life insurance policy for distribution to the current beneficiaries of the trust.

If not, the issue is whether the designation in the life insurance policy is any good. If contingent beneficiaries were named then perhaps the insurance contract would provide that the contingent beneficiaries would take. If there is ambiguity regarding who should receive the benefits of the insurance policy the company likely would file an interpleader action and let a court decide who is the rightful beneficiary.

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Posted

Mr. Daymude offers sound advice. If the trust was revised with a title something like Amended and Restated Trust of ___________ dated 1/29/11 then there would be no problem. This points out the need to have an estate planning attorney attend to not only wills and trusts but beneficiary designatiions. You and other readers can see why attention to details and having trained and experienced estate planning attorneys involved is critical and often essential.

LEGAL DISCLAIMER Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is sjfpc@comcast.net , his website is www.sjfpc.com. and his blog is <http://frommtaxes.wordpress.com/> Mr. Fromm is ethically required to state that the response herein is not legal advice and does not create an attorney/ client relationship. Also, there are no recognized legal specialties under Pennsylvania law. Any references to a trust, estate or tax lawyer refer only to the fact that Mr. Fromm limits his practice to these areas of the law. These responses are only in the form of legal education and are intended to only provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that if known could significantly change the reply or make such reply unsuitable. Mr. Fromm strongly advises the questioner to confer with an attorney in their state in order to ensure proper advice is received. By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction, who is familiar with your specific facts and all of the circumstances and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question. Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency.

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I hesitate to add more than complimenting the two attorneys who answered first. The need to get a conultation is a very important suggestion. Although very often active clients of ours have questions which we answer without chargeing a fee, it is worth retaining an attorney even if a consultation fee is needed- the results of procrastinating can lead to a very, very bad outcome,, i.e.- penny wise.......etc
Bob Brenna Jr
Brenna Brenna and Boyce pllc
Rochester, New York 14614

Bob, Robert L. Brenna, Jr. No relationship is intended, agreed upon or accepted by answering this general question Brenna Brenna and Boyce PLLC Rochester, New York brenna@brennalaw.com

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I am having a little trouble understanding your question. However, generally, insurance is a contract. You need to look at the beneficiary designation on the insurance contract, and whomever that states, will control. To be payable to the trust, the beneficiary designation probably should say something similar to "Jane Doe, trustee of the Jane Doe Revocable Trust, or successor trustee." To be payable to an individual, it will just say "Jane Doe." In the case of being payable to an individual, it would not transfer to the trust directly, but if Jane Doe has a will with language that effectively sends that property to her trust, then the trust will get the insurance proceeds but only after probating the will.

Complicated? Yes, and consulting with a lawyer probably is worth the cost.

Doug Holbrook
Holbrook & Associates LLC
Newport Oregon
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The only document I have in my possession as I am not the Trustee but previously was named as such a few years ago, is actually NOT a life insurance policy but a variable annuity. This is merely a statement dated July of last year. My relative passed away in December of last year. This particular statement indicates her name "Jane Doe Revocable Trust DTD 01-29-01 with a death benefit of a considerable amount as of July 13, 2011. I mistakenly thought this was a life insurance policy and I apologize to all who responded giving advice under that presumption. I don't know if that changes anything or not. The trustee of her estate and the beneficiary of most of her estate has already forced me to hire an attorney to obtain the personal items she left for me. He has reluctantly complied in sending the items finally and because of this I have dismissed my attorney. However, because I have this variable annuity statement with an older date and it was not incorporated into the most recent trust dated in 2011, I am curious as to who was named as beneficiary. The one person who could have been named is now deceased. Should I simply contact the insurance company who has handled this investment for all these years? There is a remote possibility that she had other persons named as contingent beneficiaries and this could be an unsettled matter.

Douglas R Holbrook

Douglas R Holbrook

Posted

An annuity is like an life insurance policy for these purposes. Yes, find out how the annuity contract beneficiaries are named and their order, and put on a timeline with the deceased ones. It is possible the annuity belongs to another's estate. -- NOTICE: This communication including any attachments may contain confidential and/or privileged information. If you are not the intended recipient, or believe that you have received this communication in error, do not print, copy, retransmit, disseminate, or otherwise use the information. Please indicate to the sender that you have received this e-mail in error, and immediately delete and destroy the communication and any copies you may have in any format.

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