Tag Archives: www.diesmart.com

Unclaimed property – Are you a beneficiary but you don’t know it?

Over the last five years or so, a study has been conducted to determine how insurance companies ensured that beneficiaries of life insurance policies were notified that a relative with a life insurance policy had died.

The study was initiated by California Comptroller John Chiang, who used a Connecticut auditing firm to examine the payment practices of 21 life insurance companies nationwide.  The Controller’s investigation “has revealed an industry-wide practice of companies both failing to pay death benefits to the beneficiaries of life insurance policies and ignoring their legal duty to turn the money over to the State for safe keeping.  Instead, companies would draw-down the policies’ cash reserves in order to continue collecting premium payments from the deceased.  Once the cash reserves were depleted, the company would cancel the policy.  Past audits also found that insurers did not routinely cross-check the owners of dormant accounts with government databases listing the deceased.  In other cases, companies had direct knowledge of the policy owner’s death, but still did not notify the beneficiaries.”

When questionable practices were uncovered, lawsuits ensued.  The premise of one of the latest was that insurers used the Social Security Death Master File to determine whether  those insured who had living benefit riders to annuities had died and, if so, they acted promptly to stop payments.  However, the Death Master File and other means weren’t used as often to ensure that beneficiaries of life insurance policies were promptly notified that a relative with a life insurance policy had died, and the funds from that policy paid out.

In the case of one recent lawsuit, the lead plaintiff claimed that he was notified only in 2010, four years after the death of the insured, and then only by the state of Illinois Treasurer’s Office…not by the insurance company.  He received only a small sum, and it wasn’t until June 2012 that a larger sum was paid, without a good explanation.

Earlier this month (June 2013), Mr. Chiang reached a settlement on behalf of the state of California and its residents with 11 insurance companies who had been found to have underpaid life insurance benefits.  The agreements he reached required the 11 companies to do the following:

  • Restore the full value of all impacted accounts dating back to 1995;
  • Fully comply with California’s unclaimed property laws and cooperate with the Controller’s efforts to reunite these death benefits, annuity contracts and retained asset accounts with their owners or, in many cases, the owners’ heirs;
  • Pay the policy beneficiaries 3% compounded interest on the value of the held amounts from 1995, or from the date of the owner’s death, whichever is later.

If the benefits are not paid to the heirs within a specified period of time, the law requires businesses to send the list of abandoned property to the state.  In California, the period of time is three years; it varies by state.  In many states, this has become a large source of revenue.  However, the states’ first goal is to return the money to its rightful owners.

Many other states have followed California’s lead, filed suits against the major insurance companies, and will also benefit from California’s settlement with those 11 companies.

To learn more about beneficiaries and estate related topics, go to www.diesmart.com.



Defeat of DOMA has major estate tax implications

The Supreme Court today made a decision to strike down DOMA (Defense of Marriage Act); this will dramatically expand the access of married gay couples to many federal benefits related to tax, health and pension that have been denied to them until now.  This decision affects same sex couples in the 12 states and the District of Columbia which allow gay marriage; these couples represent about 18% of the U.S. population.  With the addition of California, the percentage will shoot up to 30%.be even higher.

DOMA was signed into law by President Bill Clinton in 1996, and prevented the government from granting marriage benefits in more than 1,000 federal statutes to same-sex married couples in the states that allowed gay marriage.

One very important benefit of today’s Supreme Court decision is related to estate taxes.  Until now, same sex married couples could not benefit from married couple estate tax laws.  Now they will have the same benefits as all other married couples.

According to Yahoo News,  ” Eighty-three-year-old New Yorker Edith Windsor brought the DOMA suit after she was made to pay more than $363,000 in estate taxes when her same-sex spouse died. If the federal government had recognized her marriage of more than four decades, Windsor would not have owed the sum. ”

With the Supreme Court’s decision to strike down DOMA with a 5-4 vote, Windsor will finally be eligible for a tax refund, plus interest.

For more information about estate taxes and settling an estate, go to www.diesmart.com.

Whole Body Donation – Another Option


The other night, I was at the emergency room of our local hospital and overheard half of a phone conversation.  Evidently, a relative had died of cancer within the last hour and there was no money available for a funeral.  The person I could hear was lamenting that she had no idea what to do.  She wanted to do the “right” thing for the deceased but didn’t know what that was.

Respecting her privacy (even though she was talking on a cell in the middle of the lobby), I said nothing….but I began to think about options she might have.

One that is not talked about much but could have been the solution to her quandary is whole body donation. Study of human bodies can help in the discovery of cures for many diseases and medical conditions and can aid in the development of new medical and surgical procedures as well as new, potentially life-saving, medicines.

If you think this is something you’d like to do, you should make the arrangements prior to your death.  You can preregister with a medical school or research organization by signing a consent form stating your wish to donate your body.  A copy of the consent form should be put with your will and other valuable papers so it can easily be found.

When you die, your family should notify the facility.  They will transport your body transported to the research facility or medical school with which you signed the consent form.

If you did not sign a consent form agreeing to whole body donation, your family can still decide this is what they wish to do after your death.  They will need to contact the medical facility or research center of choice and sign an after death donor form.  Then the process is the same as if you had made arrangements pre death.

When the group to whom the body has been donated is finished with it, they will cremate it and return the ashes to the next of kin or dispose of them in the way you have designated.

Cost to the family – usually zero.

For a list of medical schools which accept whole body donations, check out the list published by the University of Florida State Anatomical Board.

A national organization we found which provides a lot of information about this subject is MedCure.

Finally, for further information about funeral options and body and organ donation, go to www.diesmart.com.













Long term care insurance: If you’re a woman, be prepared to pay more!

Over ten million people have purchased long term care insurance, primarily to cover healthcare expenses that may occur in old age or during catastrophic illness.

Up until now, this insurance usually treated men and women equally.  Policy price depended on health status and age, not gender.

But this year, long term care insurance companies have indicated that they are going to start charging women more for their policies.  One of the first companies to introduce this new type of pricing is Genworth Financial Inc., purported to be the largest seller of insurance in the United States.  Their goal is to reflect statistical realities.  Women live longer than men and prepare more effectively for their futures by buying long term care policies.

According to Genworth, two thirds of its long term care payouts go to women, even though, in 2011, women only bought about 57% of its policies.  Women live longer than men and have higher rates of disability and chronic health problems.

So this spring, if their proposed plan is approved by regulatory agencies, Genworth will introduce gender specific policy pricing.  For women, that will boost the cost of a new policy by 20 to 40%, depending on age and benefit package selected.

A Genworth spokesperson said that the new pricing will only affect women applying on their own.  Lower rates will still be offered to married couples who purchase joint coverage and the changes won’t affect current policy holders.

For more information about long term care, go to www.diesmart.com.


Nursing Home: If your parent needs one, will you have to pay the bill?

This is a true and shocking story.  John Pittas was ordered by a Pennsylvania court to pay his mother’s $92,943.41 nursing home bill under a filial support law.  The filial support law states that certain family members are liable for the care, maintenance and financial support of some other indigent members of that family.  It’s a law that’s been around since colonial times in one form or another.  Several states have abolished it but 29 have not.

John’s mother entered the Liberty Nursing Rehabilitation Center in Allentown, PA and spent about six months there after breaking two legs in an auto accident in September 2007. 

In March 2008, his mother, who was born in the United States, relocated to Greece where two other children live.

As the only family member still living in this country, Pittas was sued for payment of the huge bill.  The owners of the nursing home sued him for the money and a 2011 court trial was decided in the nursing home’s favor.

If his mother’s Medicaid application had been approved prior to the accident, this never would have happened.  Medicaid would have paid.  Last year, Pittas appealed but the Superior Court of Pennsylvania once again ruled in favor of the nursing home.

If you have an aging parent who may one day need nursing home care, what can you do to avoid having the same problem as John Pittas?

1) Talk with your parent about his or her financial resources.  If your parent is reluctant to have this discussion, relate John Pittas’ story.  It’s better to have a plan prior to an accident or other health crisis.

2) If your parent has limited resources, find out whether that parent is eligible for Medicaid.   If so, get your parent to apply immediately so that it will be available when needed.

3) If your parent is not eligible, sit down with all the members of your immediate family and talk about which family members can provide care or financial aid in case it is needed.

Don’t delay.  Put a plan in place today so that you won’t suddenly receive an unexpected bill for $93,000 or more.

For more information about planning for long term care and Medicaid, go to www.diesmart.com.