The Moneyist: ‘My uncle accessed my father’s bank accounts while he was dying’: He also took his house keys, truck, wallet and personal papers. What can we do?

My dad has a small life-insurance policy, a 401(k), a small pension, totaling less than $100,000. My siblings and I do not know who the beneficiary is on any of these things. We suspect he may have made my uncle — his only sibling — the beneficiary.

I was told (by my uncle) that his ex-wife would receive his small pension because she was the last wife before he died, and that is the law in Louisiana. Dad has a home in Indiana that he recently refinanced for about $50,000 less than it is worth and has a truck worth about $10,000 more than he owes on it. He has various personal possessions, none of it worth very much: clothes, household items, photos, etc.

My siblings and I all live in Louisiana. Due to hurricane damage to our homes only one of us has the means to travel right now. We have generally agreed that one of us will travel to Indiana and remove the mementos, photos, etc.

Things get sticky

That is where things get sticky. My uncle accessed my father’s bank accounts while he was dying to purchase a niche in a cemetery. (My siblings and I were able to handle much of the next-of-kin paperwork remotely. )

My uncle has removed my father’s truck from his house, and drove it to his own house. He has called all of the creditors and account holders and reported the death. He did all of this without a death certificate.

He has possession of my father’s wallet, personal papers and keys to his home. He is refusing to turn any of these items over to us, despite not being the next of kin. He insists that my siblings and I cannot touch anything in the house until it all goes to probate. We did not ask him to do anything. He says he has an appointment in December to see an attorney. Why?

He insists we need an executor. One of my siblings has agreed to handle that. And even if we all agreed to let my uncle act as executor, he has not been appointed anything yet. Honestly, I don’t think my uncle had any business accessing the funds while my dad was under a DNR and too ill to know what was going on.

He has already been through the house multiple times, opened the safe, disposed of medications. Who knows what else? I know he may have our best interests at heart, and may have a need to be involved.

Can he keep us out of the home? Are we permitted to donate household goods, clothing and remove mementos? No one is trying to reverse potential beneficiary decisions or steal from the siblings. Do we need probate for the house? It is starting to make us feel very stressed in a time when the siblings wanted to video chat, and heal and find peace.

Caught Between the Uncle and a Hurricane

Dear Caught,

Bereavement is a difficult time, even without such shenanigans from your uncle.

Let’s generously assume that your uncle wants to protect your father’s estate, and make sure that everything is above board and distributed equally. He is correct that your father’s estate must go through probate, so all of his assets are accounted for and distributed to his heirs. He is most certainly incorrect in the way he went about it. This should be addressed as soon as possible.

Your uncle was likely trespassing in your father’s home, and had no legal right to remove his property or his papers. A lawyer should request the return of those items so he/she can settle your father’s estate. If your father died without a will, his assets should be distributed among his children. His insurance, 401(k) and pension should avoid the probate process, but naming a beneficiary rather than your estate is critical to avoiding probate. (Read more on that here.)

“If you have a lot of debt, you might be concerned that creditors may try to go after your 401(k) plan or benefit in the event that you pass away,” according to the Kelley Financial Group. “Fortunately, this is generally not possible. 401(k) rules stipulate that IRA and 401K account types are protected from creditors. The only time a creditor might be able to receive money from your IRA account could be if you named your estate as your beneficiary.”

Executor vs. administrator

An executor typically oversees the deceased person’s will, while an administrator is appointed by the court if the person dies intestate. The estate lawyer’s many functions are outlined here by RMO Probate Litigation: “Collecting proceeds from life-insurance policies, assisting in the payment of bills and debts, resolving income-tax issues, obtaining appraisals for the decedent’s real property [and] transferring assets in the decedent’s name to the appropriate beneficiaries.”

Some people mix up probate and estate taxes when dealing with estate planning. There may, for example, be taxes payable on insurance policies if the ownership has been transferred within three years of the person’s death without any consideration, or if they named their own estate as beneficiary or, in another hypothetical situation, if the named beneficiaries themselves have passed away.

Finally, your uncle should not have access to your father’s bank accounts. “Many banks allow their customers to name a beneficiary or set the account as Payable on Death or Transferable on Death to another person,” per Bankrate.com. “If the account holder established someone as a beneficiary or POD, the bank will release the funds to the named person once it learns of the account holder’s death.”

I wish you both a speedy and satisfactory resolution of your father’s estate. 

You can email The Moneyist with any financial and ethical questions related to coronavirus at [email protected], and follow Quentin Fottrell on Twitter.

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