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The Moneyist: My father named my late mother as a beneficiary on his $80,000 life insurance, but my stepmother says it belongs to her. Who’s right?

‘My stepmother betrayed my dad’s last wishes.’
Dear Quentin,

My dad died in September in Pennsylvania (although he was a Florida resident), and my stepmother insists there is no will and no estate, but then she texted to say that my father wanted me to inherit an account that listed my late mother as beneficiary. The insurance company told me this account was valued at $80,000 and it would need to go to probate.

A few weeks later they emailed and said they decided that all of it should go to my stepmother as my dad forgot to change the account from my mom as beneficiary to me. She obviously thinks that’s an excellent decision, and now she’s telling me he must have changed his mind and that he meant it to go to her even though she texted me differently.

I’m under the impression that estates in Florida valued at over $75,000 are required to go through probate, and I’m wondering if my stepmother is legally allowed to just take an account that listed my mom as beneficiary that my father told her was meant for me. Isn’t probate required for anything over $75,000 in Florida? 

I’m a Colorado resident, an indie musician and music teacher without a lot of financial resources. I’m upset that my stepmother betrayed my dad’s last wishes, and I am concerned that she is not following the law regarding settling his estate. Unfortunately, the only proof I have is minimal email communication with the insurance company and her text messages.

Can I open a probate case and require her to be transparent? Or is there anything else I can do?

Bereft Daughter

Dear Daughter,

Always consult a lawyer, but they will tell you that text messages matter little in situations like this, even if your father sincerely wanted you to have the proceeds from this life-insurance policy. Your stepmother will keep whatever she believes she’s entitled to under the law, and unfortunately your wishes or those of your father won’t play a role. It’s a cautionary tale to always update your beneficiaries, especially if you remarry or — as happened in this case — the beneficiary in question passes away.

The information you received from your stepmother is confusing. Estate law varies by state, but if a beneficiary has already died, payments they would have received generally go to a contingent beneficiary. That would have been you had your father added your name to the beneficiary designation, but he did not do that. Generally, in cases such as this, the money ($80,000 in this case) would be returned to the estate and distributed accordingly. The probate court would pay off any debts and distribute the money according to the intestate laws of that state, if the deceased had no will.

But your case is trickier. “When someone dies without a will, there are some parts of their estate that may not have to go through probate court. If you have funds in a 401(k) or other retirement account and have designated beneficiaries, this avoids intestate succession,” according to di Pietro Partners, a law firm with offices across Florida. Intestate refers to dying without a will. “Also, any property owned jointly with another person does not require probate court. It simply transfers upon your death.” But there are caveats: this applies to life-insurance policies with named beneficiaries or payable-on-death accounts, and property held jointly with rights of survivorship.

You will have to abide by the law in your father’s home state. There may yet be hope for an inheritance if your father did not leave a will. Under intestate law in Florida, if a spouse dies and they have children from someone other than their spouse, that spouse receives half of the intestate state, while the child or children receive the other half. (I mention this as you make no mention that your father made a will in your letter.)

If you were to contest this sum of $80,000 — which I understand would make a meaningful difference to your life — it could take months, even years, and the lion’s share could very likely end up going to your lawyer. If an attorney advised you that you did have a case — emphasis on “if” — it would cost your stepmother money to fight this too. That $80,000 could make a difference to you, but you may discover that it’s small potatoes to your stepmother.

Yocan email The Moneyist with any financial and ethical questions at [email protected], and follow Quentin Fottrell on Twitter.

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The Moneyist regrets he cannot reply to questions individually.

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