Hey ladies, its been a while since I have posted. Its been a rough three weeks. My brother who lives in Florida (I live in Maine) passed away on Feb. 5. He was only 49. At this point they still are not sure what happened. He died in his sleep. Its been a very hard situation because he lost his girlfriend of 12 years about 18 months ago after her very long battle with cancer. She had a son who my brother has raised for many years. So, now at the age of 19, Jeremy is left alone. Both his mother and the man that raised him are gone. My brother was my last surviving relative from my side of the family (other than one uncle on my mothers side). Its hit me very hard.
I am blessed to have a great hubby, and two daughters who have been wonderful thru this hard process. To make a very long story short. My brother has had many issues over the years, one dealing with the IRS. He was in the process of trying to settle his debt. When he passed, everything he actually owned was in Jeremys name so that the IRS could not take it. With that being said, he had not changed his life insurance policy and the beneficiary was his girlfriend (who predeased him). He left no will. I just started the process of working with the insurance company. The money may have to go into an estate with me as the person in charge, if that happens, I am afraid the IRS will take it all. I am not sure what to do. I am debating if I should even go to the expense of setting up an estate if the IRS will just end up with it all. I have wiped out my savings account already just getting my family Florida and paying the funeral expenses. I have been toying with the idea of getting in touch with the IRS to try to compromise. If I don't turn in the policies.....no one gets the money, including the IRS. Any advice ladies? I am emotionally worn out at this point.

Tammy, I wish I had advice for you, but perhaps someone else here does. I did want to take a moment and tell you that I am so sorry for the loss of your brother and what you're going through right now. You will be in my thoughts.

I would highly suggest finding a Tax Attorney if you lived here by me I have a Tax Attorney working at my Office and a Premium Office , I wont see him probably for a few weeks to be able to ask him anything about this he is on travel with his FT job and I am going away next week and his and my schedule seldom cross.

You could do an offer in compromise, but first you need to make sure you are named the executor of his estate and make sure that you ask to be reimbursed the costs from any life insurance proceeds for the funeral and costs.

An offer in compromise is fairly easy I have did a few in my day, but it is best done by an Enrolled Agent and most of your H&R Blocks have EA's there and some Jackson Hewitt's do but not all. I know in our area we have on EA in every office. Look the form up on the IRS website.

I am truly sorry for your family's loss and Jeremy's loss also, many prayers wil be said and my thoughts are with you during this time. Take it one day at a time everything will fall into place Tammy {{{HUGS}}}

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I am very sorry for the loss of your brother.
I would suggest that you go ahead and make the claim on your brothers insurance - and pay off the funeral and IRS. Are there any other things - such as a home or cars that can be sold to pay the remainder of what he owed the IRS?

No advise other than seeking help thru an EA or tax attorney. It will cost some $$ but no way I would take something like that on alone.

You are in my thoughts. I am so sorry for your loss

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The IRS won't even talk to you unless you are the Executor, I just went through it with my dad's estate.

Can I ask how much he owed? You'll have an easier time if it's under $5000, which is what a rep told me. It's not easy and at times I thought it would have been easier just to let everything go, we didn't end up with anything except a lot of stress when all was said and done.

You will at least get your funeral expenses back, that is the FIRST thing to come out of any money generated by the estate, so it would be worth it to turn in the insurance papers if just for that.

I am so sorry for your loss and all of this mess doesn't make it any easier.

I did try a lawyer, but he was useless, which was probably just a wrong coice even though he came recommended. I ended up canning him and doing it all myself, it went faster, but was a lot more work.

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My brother ran his own company, but it was not in his name. His deseased girlfriends son is the actual named owner. So, all those items now belong to him. I have no say in what happens with those items, but the IRS can't touch any of those items. From what I understand, the plan is to sell off everything in the company and pay off all the companies debts, and the remaining money will go to my brothers girlfriends son. We are on good terms, but I know that he has a long road ahead of him, surviving without either of the two people who raised him. I feel that he will come out of the situation with enough money to live comfortably for a while. The only real asset my brother had in his name was the life insurance policy, and a very small savings account. No car, home or anything else was in his name. So, I am stuck...dealing with a very strange situation. I did pay for the funeral bill because it needed to be paid by someone, and no one else stepped up to pay it. Its just been a very stressful situation and living so far away has only added to the drama. I did go to Florida for a week and helped out with what I could, but it was a very emotional time for all of us.

I wish it were under that amount. I found an entire stack of correspondence with the IRS, he originally owed almost $150,000.00. They had been going back and forth on trying to settle the account. The last correspondence I saw was a month ago, and it mentioned a figure that was closer to $100,000.00. But, nothing had been finalized. Our hope was that we would not have to set an estate up, and go thru probate. We are still waiting to hear from the insurance company on if the policy has an *heir at law* clause. Which would mean we would not have to set up an estate, because the money would not be part of an estate. I have a feeling when all is said and done, we will indeed have to go thru probate and set up an estate if we want to collect the insurance money. Sadly, with the amount owed to the IRS, there will more than likely be nothing left. I just don't want to have to pay more money out of my pocket to a lawyer to set the estate up, if the IRS will seize all the money in the end. I can't afford to be out even more money.
I guess I will probably not be able to do anything until I am named executor...

When the named beneficiary is deceased, insurance companies will do one of two things, at their discretion (meaning you don't get to choose). They will either A) only pay the estate, or B) pay the beneficiary's heir(s) - which would be the son. The company will minimally require your brother's certified death certfiicate, as well as that of his girlfriend's, their claim form, and perhaps some statement of heirs of the deceased beneficiary.

The only way you would receive any part of the proceeds of the policy is if the insurance company does pay to the estate. Your reimbursement would be for the funeral costs (as long as you can provide proof). Any attorney fees typically come off the top as well. So it might be a better situation than you think. Of course, if the insurance company pays to the beneficiary's son, it's his.

Those things being said, as a taxpayer, you need to really try to pay the IRS with his assets. Those who avoid paying the IRS only cost everyone else in the end. I know this is a very trying time for you, but he obviously had some shady things going on to put everything in a 19 year old's name.

Talk to the insurance company again and good luck.

dl

Well, I'll be doggoned....dl....dedlast...and deddlast with Double-Ds.

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[quote=dedlast;3165817]When the named beneficiary is deceased, insurance companies will do one of two things, at their discretion (meaning you don't get to choose). They will either A) only pay the estate, or B) pay the beneficiary's heir(s) - which would be the son. The company will minimally require your brother's certified death certfiicate, as well as that of his girlfriend's, their claim form, and perhaps some statement of heirs of the deceased beneficiary.

The only way you would receive any part of the proceeds of the policy is if the insurance company does pay to the estate. Your reimbursement would be for the funeral costs (as long as you can provide proof). Any attorney fees typically come off the top as well. So it might be a better situation than you think. Of course, if the insurance company pays to the beneficiary's son, it's his.

Those things being said, as a taxpayer, you need to really try to pay the IRS with his assets. Those who avoid paying the IRS only cost everyone else in the end. I know this is a very trying time for you, but he obviously had some shady things going on to put everything in a 19 year old's name.

Talk to the insurance company again and good luck.

I have talked with the insurance company several times. They already have both death certificates, the claim form and they also needed my birth certificate to prove that I am his sister. I was told that I am the only one who can file a claim. Because the beneficiary passed (his girlfriend) before he did, they told me that it reverts back to the original policy holders next of kin, not the beneficiarys son. I honestly wish it would go to her son, and not into the estate. If it goes directly to a named beneficary, the IRS cannot take it (unless the beneficiary owes the IRS money). As far at the business is concerned, it actually had his girlfriend named as the owner, when she passed it went into a trust for her son. So, it wasn't actually put in the 19 year olds name, but in trust for him. I have noticed thru some research that sometimes, insurance companies will pay the policy amount to the heir at law, instead of the estate. Its all very confusing. I will give the insurance company another call to see if they might be able to give me some answers. I have to say that my brother wasn't a saint, he had his share of problems. The IRS problems started 20 years ago with the sale of a house that he did not pay taxes on, followed by several years of not filing a return. The penalties are what made it so bad. He battled addiction for many years, and that was when most of his problems started. Sadly, he had spent the last five years trying to rebuild his shattered life, and had finally stopped running from his demons... I am not trying to defend him, just give a little more of an explanation.

OP. I am sorry for the loss of your brother. That being said, you do need to make sure to pay the IRS what he owes, it seems from all your posts that you are trying to get away without paying them what he owes, I understand you don't want to be out any money for the funeral, but he DOES owe the IRS the money. They should get their money.

I do understand that he owes money to the IRS, but life insurance is to offset the fees associated with a death, and to help the family. He has left behind a nineteen year old who is just starting his life. He has no parents, no home and it is going to be a difficult road for him. I actually don't have any problem with paying the IRS, I just feel that the penalty fees are way beyond what is necessary. Under any other circumstances, Life Insurance money cannot be taken by any creditor, the only reason this is different is because he did not change the name on his policy. So Yes...he DOES owe the IRS money, but what started out as a small amount grew into more than double what he actually owed (yes, it was his fault). So, I am NOT trying to get away without paying them, I just would like it to be a fair amount. I guess I am just not as noble as I could be....
I wouldn't wish this position on anyone. I appreciate the support and advice. Apparently I have come across as something I am not....

I just reread what I wrote and I wanted to just say that I am totally exhausted, sick of dealing with the mess left behind by my brother, still grieving his loss and broke. Maybe that will help someone out there to understand where my head is at. I am totally alone is this, he was the only person left from my family. I am still trying to cope with the feeling that I have no family left from either my mother or fathers side. I wiped out my savings not only getting to Florida, but paying all the burial fees. I am trying to decide if I should even go forward with trying to get the insurance money. I can't afford to pay a lawyer thousands of dollars to help with the probate process, just to turn all the money over to the IRS.

Tammy, I can't imagine what you are going thru, I'm sorry if I came across unsympathetic. The IRS usually is really good to work with if you give them your situation. Have you talked with anyone there yet, letting them know you are next of kin? If the person you originally speak with doesn't want to help you, kindly ask for a supervisor, that way you can get someone there on your side, helping you with the situation. They can help you when trying to get the fees and interest reversed. Good luck.

Check your yellow pages for a Legal Aid Society. They provide legal services for free (or cheap) to those who can't afford an attorney on their own. I am sorry for your loss.

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I am sorry about your brother. Where is the boy's bio father?

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His bio father is not in the picture. As far as I know, he hasn't been for a very long time. He considered my brother his *dad*, when his mother was sick with cancer and my brother was the only one who stepped up to the plate, it had a huge impact on the relationship between my brother and his *son*. Although my brother had his issues, he did everything within his power to help his girlfriend win her battle with cancer. After years...she just couldn't fight the cancer anymore. The entire situation is really sad...

I'm so sorry for your loss. I'm sure your head and heart are both reeling from everything that has happened.

From my own experience, my husband's aunt died (husband was executor) and she had a life insurance policy that named her husband (then deceased) as the beneficiary. There was no one else named, so the insurance company had no choice but to pay it to the estate. She owed her nursing home $$$ and they ended up claiming the money from the estate. My husband, as executor, did get to claim all his expenses as Executor before the nursing home got their money.

The insurance company said when the beneficiary of a policy died before the policyholder and no one else is named, it automatically is paid to the estate.

But if you are named Executor, you are entitled to your expenses of taking care of your brother's estate. Be sure to keep receipts for everything you spend in taking care of his estate and then when the estate is settled, you write yourself a check for your costs. If it involves traveling to Florida, keep your receipts for everything (meals, hotels) -- you get paid first. Whatever is left, I would assume the IRS will take it. If he owed the IRS, they're entitled to their money.

I'm sorry this young 19 year old won't have any inheritance, but your brother did that to him -- not you. You shouldn't have to feel responsible for your brother's actions. He's young, though, and there are plenty of 19 year olds out there without an inheritance who are making it fine on their own.