Q: In order to claim insurance benefits, the insurance company has asked me to send it Letters Testamentary or Letters of Administration. The company said if I don't have them, I can complete another form. Why is this necessary?
A: When a person is appointed personal representative by a court, Letters Testamentary or Letters of Administration are issued to them. Letters Testamentary and Letters of Administration are essentially the same thing. The only real difference involves whether or not a will has been probated.
If a person is named personal representative in a will, Letters Testamentary are issued to that person. If no will is probated, the person appointed personal representative receives Letters of Administration. Other than the name and how they are issued, they are pretty much the same thing.
The letters demonstrate that you have been appointed by the court and that you have all of the authority that goes with that appointment. The insurance company needs the letters so that they know that you are the person that they should be dealing with and that it is OK to turn over the money to you.
In the event that you don't have letters, because a personal representative hasn't been appointed, it sounds like the insurance company has provided you with a small estate affidavit form. Certain small estates can be transferred informally using a small estate affidavit. A small estate affidavit allows someone to claim a decedent's property and assume the responsibility to distribute the money to those that should receive it. Small estate affidavits are authorized by statute and relieve the parties holding the asset, in this case the insurance company, from all liability.
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Q: Can we use a power of attorney to sell our parent's home?
A: Probably. Most durable Powers of Attorney include a provision that allows the Attorney-in-Fact to deal with real estate. You'll need to check the POA to be sure but the power is likely going to be there.
Since it's real estate, a copy of the POA should probably be recorded with the deed. That way a person purchasing the property in the future will know that an AIF had the authority to sell the property and sign the deed. If you don't record the POA, or at the very least include a specific recital in the deed about the POA, it could result in a cloud on the title to the home. Title companies usually frown on using a POA because of potential liability, but will usually agree to insure the transfer if the POA appears valid, it is recorded and the person signing the deed affirms under oath that they have the authority to sign the deed.
Thanks for the questions.