Article of Interest on Wills & Estates

MANAGE THE FUND

Wills are often drafted without reference to Life Insurance policies or other funds and the result can be catastrophic.

Peter and Mary had been living together 5 years . Peter had been married before, to Patricia. They had not divorced, but had done a property settlement. Peter wanted his partner Mary to benefit from his Life Insurance Policy. Peter gave his Lawyer instructions for a Will to be drafted to give the whole of his Estate to Mary.

He (and his lawyer) just assumed the Life Insurance Policy would be paid to his Estate. Soon after, Peter died. Peter and Mary had previously purchased a Town House together, with a bank loan. The Town House was automatically transferred into Mary’s name as they had owned it as joint tenants. Mary was now solely responsible for the mortgage debt of $210,000.00. Mary needed Peter’s Life Insurance money, as her part time wages would not cover the loan payments.

The Life Policy was worth $450,000.00. This would allow Mary to pay out the mortgage debt and leave some over for her security and comfort. She spoke to the Estate Lawyer to see when the money would be paid to the Estate. The Lawyer finally found out that Peter’s former wife Patricia was the beneficiary. Peter had forgotten to change it over when they separated years before.

Mary did not receive one cent from the Insurance Policy, and had to sell the town house as she was unable to service the debt.

Don’t make assumptions about funds, policies or investments in which you have an interest. Don’t allow your Lawyer to make assumptions about those funds either. Check it out BEFORE it is too late.

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