My ex-husband died and left our 3 toddlers as his life insurance beneficiaries. Is there a way for me, the mother to gain control of this money? Guardian of estates and Conservatorship are expensive.
The insurance company cannot lawfully pay the proceeds of the life insurance policy upon the life of your deceased husband to minor children. Minor children lack legal capacity; some adult must act for the children. If the life insurance policy allows payments to minors to be made pursuant to the Uniform Transfer to Minors Act or Uniform Gifts to Minors Act, then the proceeds could lawfully be paid to you or some other adult individual or a trust company as the custodian for the minor children under the Uniform Act. If the policy does not authorize that then the obvious alternative is a protective proceeding for the appointment of you as the children’s mother and natural guardian as the conservator of each minor child. However it is done, the money must be paid to a fiduciary for the deceased’s minor children.
Beneficiary Law & Legal Definition.
Generally, a beneficiary is a person or entity who receives a profit, advantage, or benefit. For example, a person named to receive something in a will is a beneficiary under such will. Similarly, a person named to receive the proceeds under an insurance proceeds is referred to as a beneficiary. A beneficiary is the person or entity named to receive assets or profits from an estate, a trust, an insurance policy or any instrument in which there is distribution. Related concepts include an “incidental beneficiary” or a “third party beneficiary” who, although not specifically named, gain a benefit, such as someone who will make a profit if a piece of property is distributed to another.
Minors as Beneficiaries.
While children can lawfully be named as beneficiaries on a life insurance policy, the insurance company will not be permitted to pay benefits to a minor. The funds would likely be dispersed to the legal guardian of the minor child. Many divorced parents are shocked to discover that naming their minor children as beneficiaries makes their ex-spouse the direct recipient of any insurance proceeds. This situation can be avoided by creating a trust which can hold the funds until the children are of legal age.
Uniform Transfers to Minors Act Law & Legal Definition.
The Uniform Gifts to Minors Act (UGMA), superseded by the Uniform Transfers to Minors Act (UTMA) in some states, is simply a way for a minor to own property, such as securities.
The UGMA/UTMA setup is commonly used to give monies to a minor. IRS regulations allows a person to give many thousands of dollars per year to any other person with no tax consequences. If the recipient is a minor, the UGMA provides a way for the minor to own the assets without involving an attorney to establish a special trust. When giving assets to a minor using a UGMA/UTMA, the donor must appoint a custodian (the trustee).
An UGMA/UTMA is a trust like any other trust except that the terms of the trust are set in the state statute instead of being drawn up in a trust document. Should a trustee fail to comply with the terms of the UGMA/UTMA, this would expose the trustee to the same actions as a trustee who fails to comply with the terms of a special drawn-up trust.
Conservatorships Law & Legal Definition.
A conservatorship is created by the appointment of a conservator, also sometimes called a guardian. A conservator is a person or entity appointed by a court to manage the property, daily affairs, and financial affairs of another person, usually someone who is incompetent by reason of a physical or mental infirmity or age. For example, an adult daughter may be appointed as the conservator for her father who is suffering from advanced Alzheimer’s disease. An open hearing is held before the appointment is made. The conservator is required to make regular accountings which must be approved by the court. The conservator may be removed by order of the court if no longer needed, upon the petition of the conservatee or relatives, or for failure to perform his/her duties.
Once a court has jurisdiction over a conservatorship that jurisdiction continues until it is terminated by the court. If the ward moves to another state, the conservatorship is not automatically terminated. However, it is often recommended when a ward moves to another state that a guardianship or conservatorship be established in the other state to ensure that the guardian’s or conservator’s authority will be recognized by the other state. Also, it is difficult for a court to supervise such a guardianship or conservatorship when the fiduciary lives outside the state.
Guardianship Law & Legal Definition.
A guardianship is a legal relationship created when a person or institution named in a will or assigned by the court to take care of minor children or incompetent adults. Sometimes called a conservatorship. To become a guardian of a child either the party intending to be the guardian or another family member, a close friend or a local official responsible for a minor’s welfare will petition the court to appoint the guardian. The guardianship of a minor remains under court supervision until the child reaches majority at 18. The judge does not have to honor the request when someone is named in a will as guardian of one’s child in case of the death of the parent, it is construed as a preference, but is usually honored. The term “guardian” may also refer to someone who is appointed to care for and/or handle the affairs of a person who is incompetent or incapable of administering his/her affairs. Guardians must not benefit at the expense of those they care for (wards), and in many cases are required to make accountings to the court on a periodic basis. In some courts, a guardian may be reimbursed for attorney fees related to the guardianship. Court rules regarding accountings of expenses and requirements of guardians vary and local court rules should be consulted.
In some states, if the child is a certain age or older, the court must appoint the person nominated by the child unless the court finds the nomination contrary to the child’s best interest. The court may not appoint a person against whom the child has filed a written objection. In adult guardianships, the judge is often required to make a reasonable effort to consider the preference of the person with a disability in selecting the guardian. The judge typically does not have to follow the person’s wishes, but must give due consideration to the preference of the person with a disability. Laws vary by jurisdiction, so local laws should be consulted for specific requirements in your area.
A guardianship of a child takes away the parents’ right to make decisions about their child’s life. However, it does not permanently terminate parental rights. This means that although the guardian now has custody and is responsible for raising the child, the parents are still the child’s legal parents.
The court can order a guardian to let the parents visit or contact the child, but the court may also put limits or other conditions on the visitation, such as requiring that any visitation be supervised. The time and frequency of parental visitation is often is up to the guardian (or the court) to decide. Parents may, in some cases, regain custody of their child in the future if the court determines the guardianship is no longer in their child’s best interests.
Local laws vary, but many courts require certain interested parties to be served with notice of guardianship hearings. Such notices often have to be legally served upon the person, with a sworn statement of the person making the service later returned to the court as proof of such service. In some cases, the court may waive the notice requirements. Local court rules should be consulted to determine applicability in your area.
At least one state provides for an emergency guardianship proxy. In Massachusetts, the law allows a parent or guardian, without court intervention, to appoint a short-term emergency proxy of a minor. It must be done by a written instrument signed in front of at least two witnesses who are 18 years of age or older. The proxy must also sign the instrument although he or she is not required to sign at the same time as the parent or guardian. An Emergency Proxy is prohibited if there is another parent who is willing and able to care for the minor unless that parent consents to the appointment by signing the written instrument of appointment.
Maine’s highest court has held that its probate courts have the power to grant full coguardianships to an existing parent and another person, thus enabling gay and lesbian parents to create a legal relationship between their children and the children’s parents. Whether coguardians may be appointed when one is a natural parent is an issue decided by state law, which varies by state.
Temporary guardianships are generally granted by the courts to achieve a specific purpose for a certain amount of time. Once the purpose is accomplished, the guardianship is terminated. A plenary guardian is a person appointed by the court with the power to exercise all legal rights and duties on behalf of a ward after the court makes a finding of incapacity. It is a guardian of both the person and the estate.
State statutes define mental and physical disability. However, generally, such disability or incapacity involves severe and long-term conditions that impose great limitations upon individuals’ ability to take care of themselves, express themselves verbally, earn a living, and live independently of the care of others. Such a disability also reflects the necessity for a combination of treatments and services.
Guardianships for physically or mentally disabled or incapacitated persons have, in recent decades, been understood to facilitate the independence and self-reliance of the ward. They are limited as much as is reasonable in order to allow wards to exercise as much control over their lives as possible while maintaining as much dignity and self-reliance as possible. The desires of the wards are given primary consideration. Also, wards are allowed to do as much of their own care giving as is physically and mentally possible.
The guardian will be granted only those powers necessary to accomplish for the ward what the ward cannot accomplish independently. These powers may include assuring the availability and maintenance of care for the ward, making sure that educational and medical services are maintained and adequate, and submitting updates to the court of the ward’s condition. These court updates describe the ward’s living situation, status of mental and physical health based upon medical examinations and official records, provide a list of services being received by the ward, describe services rendered by the guardian, account for the ward’s monetary assets, and any other information necessary to submit to the court in order for it to assess the status of the ward and the guardian’s duties.
