annuity overpayments

[Guest TroyRiley]

Contract participant was receiving annuity payments under his contract. Participant died, but notice of death was not received by insurer until over 1 year after his death. Consequently, erroneous annuity overpayments were made during the period after death until notification was received. Attempts to collect the overpayments have been unsuccessful. There are 3 children - it appears that the son in charge of settling the estate cashed the checks and kept the money. However, beneficiary payments are now due to all 3 children. Can the benefit payments be reduced as a means of collecting the overpayment amount? While legal action could be pursued against the son, that would be costly and time-consuming, and the overpayment amount is less than $5,000. Thanks for any input you have on this issue.

[david rigby]

This IRS ruling might be useful.

http://benefitslink.com/IRS/revrul2002-84.shtml

[Guest b2kates]

In the past, I have been involved where the plan instituted a private criminal complaint for "theft by deception" depends on your locale what is the proper law.

Recommend discuss with local DA office.

There are some legal constraints about threatening criminal action to get civil remedy. However, if willing to proceed, often this results in recovery.

Secondly, there is a procedure, where the IRS permits reduction of benefit, I believe it is limited to 25%.

Lastly, I am familiar with a situation, where the plan erroneously paid, then turned off future benefits until the funds were "recaptured". Plan treated erroneous payment as advances.l

[GBurns]

Before going to the DA or State Attorney, I suggest that you resolve the issue of your standing to bring an action.

The son in charge might have had no reasonable way of knowing that the payments were erroneous.

The son in charge was settling the estate, should the payments have been part of the estate? If he did not include these funds in the estate but instead diverted to personal or improper use, Who is eligible to bring an action?

Have you discussed the issue with the beneficiaries or the Probate Judge?