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rated:
So, my mother in law passed away a few years ago... both her Social Security and a military pension (she was receiving survivor benefits on my F-in-Law's pension) were 'automatically' cancelled. My brother-in-law was both the executor of the estate and the sole beneficiary.

Fast forward a few years... my brother-in-law passes away and I'm named the administrator of the estate.  In working with the bank where I knew his checking/savings were, I find out that he still had a joint account with my m-in-law and was still receiving my M-in-Law's pension payments from a state pension fund (again survivor benefits on a pension of F-in-Law).  Total amount received since her death is in the range of $35,000.

My plan is basically to call the pension administrator, explain the situation and see how they react.  There are enough assets in the estate to cover the 'erroneous' (there's a much stronger word I've been using) payments and I have no issue with making that payment.

Any thoughts?  Pitfalls?

TIA

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My wife was not a beneficiary... b-in-law was the sole beneficiary... no attorney really involved as estate assets claim... (more)

BigFatCat (Nov. 04, 2016 @ 7:55p) |

What percentage and which states?

ellory (Nov. 05, 2016 @ 7:51a) |

Your brother in law, as executor, should have notified the state pension administrator that his mom passed away. Presuma... (more)

DavidScubadiver (Nov. 18, 2016 @ 9:12a) |

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So basically you found out your bro-in-law was accepting checks from a pension fund? How do you know this is 'wrong' was this pension fund supposed to stop when the primary and beneficary dies or was it supposed to continue?

This isn't Social Security, the rules for the fund might be different.

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forbin4040 said:   So basically you found out your bro-in-law was accepting checks from a pension fund? How do you know this is 'wrong' was this pension fund supposed to stop when the primary and beneficary dies or was it supposed to continue?

This isn't Social Security, the rules for the fund might be different.

  Fair question... the pension benefit elected was 100% survivor benefits for surviving spouse, no additional benefits upon her death.

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BigFatCat said:   
forbin4040 said:   So basically you found out your bro-in-law was accepting checks from a pension fund? How do you know this is 'wrong' was this pension fund supposed to stop when the primary and beneficary dies or was it supposed to continue?

This isn't Social Security, the rules for the fund might be different.

  Fair question... the pension benefit elected was 100% survivor benefits for surviving spouse, no additional benefits upon her death.

And no benefits for the Son right?
Then get ready for a clawback.

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BigFatCat said:   
forbin4040 said:   So basically you found out your bro-in-law was accepting checks from a pension fund? How do you know this is 'wrong' was this pension fund supposed to stop when the primary and beneficary dies or was it supposed to continue?

This isn't Social Security, the rules for the fund might be different.

  Fair question... the pension benefit elected was 100% survivor benefits for surviving spouse, no additional benefits upon her death.

  To be sure, was there any "guaranteed xx years" option in the pension election (where the payment is made till the death of the beneficiary or for xx years, whichever happens later).

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No benefits to the son... no guaranteed years... I'm definitely prepared for the clawback, just wondering if there was anything else to be aware of.

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BigFatCat said:    my brother-in-law passes away and I'm named the administrator of the estate. 
  Named by who? Can't you decline?

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BigFatCat said:   No benefits to the son... no guaranteed years... I'm definitely prepared for the clawback, just wondering if there was anything else to be aware of.
  Is there any need for you to be aware of any of this?  Just close the bank account and be done with it.  The state will contact you if they feel there was any overpayments to be clawed back.

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Glitch99 said:   
BigFatCat said:   No benefits to the son... no guaranteed years... I'm definitely prepared for the clawback, just wondering if there was anything else to be aware of.
  Is there any need for you to be aware of any of this?  Just close the bank account and be done with it.  The state will contact you if they feel there was any overpayments to be clawed back.

  +1

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atikovi said:   
BigFatCat said:    my brother-in-law passes away and I'm named the administrator of the estate. 
  Named by who? Can't you decline?

  I'm suspecting OP's wife has now caught the windfall from which she was previously excluded, which is why OP should absolutely want to maintain as much control as possible of everything that happens from here on out.

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I think the OP should contact a lawyer - if he just closes the account and distributes the assets, he'd be distributing property which he has good reason to believe may be stolen.

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BigFatCat said:   So, my mother in law passed away a few years ago... both her Social Security and a military pension (she was receiving survivor benefits on my F-in-Law's pension) were 'automatically' cancelled. My brother-in-law was both the executor of the estate and the sole beneficiary.
 

Your spouse wasn't a beneficiary?

Did an attorney assist your brother-in-law with the settlement of your mother-in-law's estate?  If so, do you know who that was?  That would be my first phone call. 

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BigFatCat said:   So, my mother in law passed away a few years ago... both her Social Security and a military pension (she was receiving survivor benefits on my F-in-Law's pension) were 'automatically' cancelled. My brother-in-law was both the executor of the estate and the sole beneficiary.

Fast forward a few years... my brother-in-law passes away and I'm named the administrator of the estate.

  
Sounds like an odd situation.  Your spouse passed away prior to your mother-in-law, leaving BiL as the only beneficiary.  But brother in law has no dependents so when he dies his estate goes to you?  Or was your partner excluded from MiL's estate for some reason.

A decision to keep the cash and make the state ask for it back is only ok if you have left no evidence that you knew it was dirty money.  If you have any legal concerns I'd just left them know what the deal is.

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cestmoi123 said:   I think the OP should contact a lawyer - if he just closes the account and distributes the assets, he'd be distributing property which he has good reason to believe may be stolen.
  That hasn't been determined yet.

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wilesmt said:    
... But brother in law has no dependents so when he dies his estate goes to you? 

 

OP didn't say he was the beneficiary.  He said he was administrator of the estate.  Not unusual at all.  For example, I am named executor for my mother-in-law's estate, but I am not a named heir.

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wilesmt said:   
BigFatCat said:   So, my mother in law passed away a few years ago... both her Social Security and a military pension (she was receiving survivor benefits on my F-in-Law's pension) were 'automatically' cancelled. My brother-in-law was both the executor of the estate and the sole beneficiary.

Fast forward a few years... my brother-in-law passes away and I'm named the administrator of the estate.

  
Sounds like an odd situation.  Your spouse passed away prior to your mother-in-law, leaving BiL as the only beneficiary.  But brother in law has no dependents so when he dies his estate goes to you?  Or was your partner excluded from MiL's estate for some reason.

A decision to keep the cash and make the state ask for it back is only ok if you have left no evidence that you knew it was dirty money.  If you have any legal concerns I'd just left them know what the deal is.

It doesn't sound odd to me at all.

SPECULATION WARNING:  One possible scenario is that brother and sister were always close.  Sister gets excluded from inheritance for marrying outside religion and/or race.  Brother gets everything upon death of the only remaining parent.  Brother and sister remain close.  Brother dies, leaves his sister everything because brother never married or had any kids of his own.

OP has to first figure out why the money continued to pour in after MIL's death and confirm whether his understanding of the spousal benefit pension as described above is correct.  If BIL was somehow legally entitled for some reason that OP is not yet aware of, it's time to investigate what that reason might be, which is why dcwilbur is 100% on the money with his suggestion to contact the lawyer who assisted BIL settle MIL's estate.

Even if BIL wasn't legally entitled to the money, but somehow thought he was, that would have a sort of decriminalization effect on the whole situation.  If BIL didn't realize he wasn't entitled to that money, it means there's no criminal intent.  And lack of criminal intent means the state is less likely to investigate (the lack of a living defendant already makes it less likely that the state will spend any money investigating), and without an investigation, there's a greater chance of the whole thing slipping through the cracks, which would mean no clawback.

Contact the lawyer who handled MIL's estate with BIL and take it from there.

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Is this really his responsibility? I get if he is executor he needs to handle distribution of the assets, but how can he be responsible for examining how those assets came to exist? There are so many possible sources and different scenarios with information he isn't likely to have.

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vegas4x4 said:   Is this really his responsibility? I get if he is executor he needs to handle distribution of the assets, but how can he be responsible for examining how those assets came to exist? There are so many possible sources and different scenarios with information he isn't likely to have.
  Op has valid concerns. As executor he is charged with settling legal debts as well as distributing remaining funds in accordance with the will.

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cajundavid said:   
vegas4x4 said:   Is this really his responsibility? I get if he is executor he needs to handle distribution of the assets, but how can he be responsible for examining how those assets came to exist? There are so many possible sources and different scenarios with information he isn't likely to have.
  Op has valid concerns. As executor he is charged with settling legal debts as well as distributing remaining funds in accordance with the will.

  But he is not charged with auditing the estate, nor investigating potential liabilities.  If the state sends the estate a bill, it's his obligation to pay it.

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DTASFAB said:   
cestmoi123 said:   I think the OP should contact a lawyer - if he just closes the account and distributes the assets, he'd be distributing property which he has good reason to believe may be stolen.
  That hasn't been determined yet.

  That's why I said "good reason to believe."  The OP clearly believes that the money was received fraudulently, look at his comment: "the 'erroneous' (there's a much stronger word I've been using) payments".

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vegas4x4 said:   Is this really his responsibility? I get if he is executor he needs to handle distribution of the assets, but how can he be responsible for examining how those assets came to exist? There are so many possible sources and different scenarios with information he isn't likely to have.
  He's not responsible for investigating, but I would think he has a degree of responsibility if he comes to find out the assets don't actually belong to the estate.  If he opens a safe deposit box owned by the deceased, and there's $50k in cash in there, that's an asset that can be distributed.  If there's $50k in cash in there and a note from the deceased saying "I stole this from the First Bank of Someplace on June 5th, 2014," then he's got an issue.  

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cestmoi123 said:   
DTASFAB said:   
cestmoi123 said:   I think the OP should contact a lawyer - if he just closes the account and distributes the assets, he'd be distributing property which he has good reason to believe may be stolen.
  That hasn't been determined yet.

  That's why I said "good reason to believe."  The OP clearly believes that the money was received fraudulently, look at his comment: "the 'erroneous' (there's a much stronger word I've been using) payments".

(1) Plausible deniability.  (2)  OP believes it to be fraudulent, but OP could be mistaken, and that changes everything.
cestmoi123 said:   
vegas4x4 said:   Is this really his responsibility? I get if he is executor he needs to handle distribution of the assets, but how can he be responsible for examining how those assets came to exist? There are so many possible sources and different scenarios with information he isn't likely to have.
  He's not responsible for investigating, but I would think he has a degree of responsibility if he comes to find out the assets don't actually belong to the estate.  If he opens a safe deposit box owned by the deceased, and there's $50k in cash in there, that's an asset that can be distributed.  If there's $50k in cash in there and a note from the deceased saying "I stole this from the First Bank of Someplace on June 5th, 2014," then he's got an issue.  

The only issue is where to shred the note and how to kill any people who might know of its former existence.  

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Glitch99 said:   
cajundavid said:   
vegas4x4 said:   Is this really his responsibility? I get if he is executor he needs to handle distribution of the assets, but how can he be responsible for examining how those assets came to exist? There are so many possible sources and different scenarios with information he isn't likely to have.
  Op has valid concerns. As executor he is charged with settling legal debts as well as distributing remaining funds in accordance with the will.

  But he is not charged with auditing the estate, nor investigating potential liabilities.  If the state sends the estate a bill, it's his obligation to pay it.

  I'd think it would be the estates obligation, not him personally. If he's distributed the money, let the state try and get it back from those people.

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cajundavid said:   
vegas4x4 said:   Is this really his responsibility? I get if he is executor he needs to handle distribution of the assets, but how can he be responsible for examining how those assets came to exist? There are so many possible sources and different scenarios with information he isn't likely to have.
  Op has valid concerns. As executor he is charged with settling legal debts as well as distributing remaining funds in accordance with the will.

If the estate is big enough to exceed the threshold for federal estate tax or state estate tax in the deceased's last state of residence, the filing of tax forms will probably require at least some cursory auditing of the estate.  As executor, OP may have to bear some of that burden, at least from a legal standpoint.  Hiring an estate attorney to handle it should effectively get OP off the hook for any "mistakes" made by the lawyer.

If there's state estate tax due to a state with a lower threshold than the federal estate tax, but no federal estate tax due, it's highly likely that a federal form 706 will still be required; it will simply indicate no estate tax due to the federal government.

If there's no federal 706 form and no state form, OP could just as easily forget that he ever saw any checking account statements that were generated during his BIL's life.  Simply take the money that's in the account now and distribute it without hiring a lawyer.  Then play dumb if anyone ever comes asking questions, which they won't, as long as he erases his FW browsing history.

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DTASFAB said:    Simply take the money that's in the account now and distribute it without hiring a lawyer.  Then play dumb if anyone ever comes asking questions, which they won't, as long as he erases his FW browsing history.
 

  When OP closes the joint account (BiL plus MiL) as part of administering the estate, the pension deposit to that account will get returned. That could trigger an investigation by the pension administrator.I am sure "erroneous" payment of pension to a deceased beneficiary is not uncommon and the pension folks can sniff it once something triggers it.

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fwuser12 said:   
DTASFAB said:    Simply take the money that's in the account now and distribute it without hiring a lawyer.  Then play dumb if anyone ever comes asking questions, which they won't, as long as he erases his FW browsing history.
  When OP closes the joint account (BiL plus MiL) as part of administering the estate, the pension deposit to that account will get returned. That could trigger an investigation by the pension administrator.I am sure "erroneous" payment of pension to a deceased beneficiary is not uncommon and the pension folks can sniff it once something triggers it.

Hadn't thought of that... my father never had DD for his monthly pension checks.

OP could drain the account and then conveniently forget to close it.    Leave a small amount sitting there and tell the bank he's waiting because he's trying to locate one additional beneficiary who's out of the country.  Let the new money that continues to come in each month just sit there.  Never go back to that bank ever again.  By the time the incompetent state figures out what happened, it will take decades, and they will be thrilled to recover the new money that gets deposited from this point forward.

rated:
As entertaining as the discussion above is, there's no way I would screw around with something like this.  OP - let us know how it works out.

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atikovi said:   
Glitch99 said:   
cajundavid said:   
vegas4x4 said:   Is this really his responsibility? I get if he is executor he needs to handle distribution of the assets, but how can he be responsible for examining how those assets came to exist? There are so many possible sources and different scenarios with information he isn't likely to have.
  Op has valid concerns. As executor he is charged with settling legal debts as well as distributing remaining funds in accordance with the will.

  But he is not charged with auditing the estate, nor investigating potential liabilities.  If the state sends the estate a bill, it's his obligation to pay it.

  I'd think it would be the estates obligation, not him personally. If he's distributed the money, let the state try and get it back from those people.

  Well, yeah - I thought it was clear "it's his obligation as administrator of the estate".  If he distributes estate assets prematurely, I'd think it would be his responsibility to claw it back from the beneficiaries to settle any outstanding debt.  But there's also a time limit for claims to be brought against the estate.

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How do people get wrangled into the position of executor? If there is a will, it should spell out who gets what and the lawyer that prepared the will should distribute those assets and pay final bills. Absent a will, some state agency could do the same.

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Yeah, I would let sleeping dogs lie -- and certainly not go trying to alert pension folks to it. Let them figure it out -- claim ignorance, you are too stupid to understand your late BIL was doing some frauding....

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atikovi said:   How do people get wrangled into the position of executor? If there is a will, it should spell out who gets what and the lawyer that prepared the will should distribute those assets and pay final bills.
  If the lawyer is the named executor, then that is what happens.  But "professional" executors are not free, they commonly get a fee, expenses, and a percentage of the estate's assets.

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atikovi said:   How do people get wrangled into the position of executor? If there is a will, it should spell out who gets what and the lawyer that prepared the will should distribute those assets and pay final bills. Absent a will, some state agency could do the same.
  Have you ever actually read a will?  Wills typically name the executor.  Getting a lawyer to draw up a will for you doesn't include have that lawyer be your executor, just as hiring an architect to draw up house plans doesn't mean they'll also build you the house.  

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From what the OP has stated, he knows that his BiL was receiving pension payments after his MiL's death, in a total of around $35k. The OP has stated that he believes that his BiL wasn't entitled to those payments.
It's possible he's wrong, and the BiL was entitled to receive the payments.
If he's right, then it really doesn't matter whether the BiL knew he wasn't entitled to receive those payments or not. The $35k shouldn't be a part of the BiL's estate, as it's the property of the pension fund, not the BiL.

Ethically, he's obliged to contact the pension fund to confirm (or reject) his belief that the payments were in error, and reimburse the fund if they were. Otherwise, he's facilitating what he has reason to believe to be theft. Reaching out to the pension fund would also likely protect him legally.

If the ethical obligation above doesn't compel him, he should consult a lawyer to determine what legal obligations he might have, and what the risks associated with his options are.

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DTASFAB said:   
fwuser12 said:   
DTASFAB said:    Simply take the money that's in the account now and distribute it without hiring a lawyer.  Then play dumb if anyone ever comes asking questions, which they won't, as long as he erases his FW browsing history.
  When OP closes the joint account (BiL plus MiL) as part of administering the estate, the pension deposit to that account will get returned. That could trigger an investigation by the pension administrator.I am sure "erroneous" payment of pension to a deceased beneficiary is not uncommon and the pension folks can sniff it once something triggers it.

Hadn't thought of that... my father never had DD for his monthly pension checks.

OP could drain the account and then conveniently forget to close it.    Leave a small amount sitting there and tell the bank he's waiting because he's trying to locate one additional beneficiary who's out of the country.  Let the new money that continues to come in each month just sit there.  Never go back to that bank ever again.  By the time the incompetent state figures out what happened, it will take decades, and they will be thrilled to recover the new money that gets deposited from this point forward.

  Yeah, leaving clear evidence that he knew about the received checks, knew they were in error, and did nothing about it.  That sounds like a great idea.  

rated:
atikovi said:   How do people get wrangled into the position of executor? If there is a will, it should spell out who gets what and the lawyer that prepared the will should distribute those assets and pay final bills. Absent a will, some state agency could do the same.
Really?  That lawyer certainly could serve as executor, but winding up someone's earthly affairs is certainly more complicated than that.  Secure and protect the real estate, sell the cars, dispose of personal property, manage the liquidation of financial assets, coordinate receipt of proceeds of life insurance and other receivables to the estate, close bank accounts, pay bills, continue payment of utilities, taxes, etc. on real estate held, manage sale of real estate, coordinate preparation of tax returns, notify creditors, and on and on.  You want to pay someone four or five hundred dollars an hour to do that?

Incidentally, if any readers DO select a friend or relative as executor, please reward them.  A fee - either flat fee or a percentage of the estate - plus expenses, is customary. 

rated:
dcwilbur said:   
atikovi said:   How do people get wrangled into the position of executor? If there is a will, it should spell out who gets what and the lawyer that prepared the will should distribute those assets and pay final bills. Absent a will, some state agency could do the same.
Really?  That lawyer certainly could serve as executor, but winding up someone's earthly affairs is certainly more complicated than that.  Secure and protect the real estate, sell the cars, dispose of personal property, manage the liquidation of financial assets, coordinate receipt of proceeds of life insurance and other receivables to the estate, close bank accounts, pay bills, continue payment of utilities, taxes, etc. on real estate held, manage sale of real estate, coordinate preparation of tax returns, notify creditors, and on and on.  You want to pay someone four or five hundred dollars an hour to do that?

Incidentally, if any readers DO select a friend or relative as executor, please reward them.  A fee - either flat fee or a percentage of the estate - plus expenses, is customary. 

  Lawyer hands off to support staff or paralegal all the nitty gritty matters. 

rated:
atikovi said:   
BigFatCat said:    my brother-in-law passes away and I'm named the administrator of the estate. 
  Named by who? Can't you decline?

  I could... actually, I volunteered... my other brother-in-law was named... my wife was the backup... a good relationship between all... just likely to be quicker and more efficient if I handled it.

The probate has been handled already and I have testament letter in hand.

rated:
Come on guys... I'm going with a straight PYBD.

1) As the administrator, I'm legally obligated to pay off any liabilities before distributing the remaining assets. I KNOW that he should not have been receiving the pension so don't even have plausible deniability. Had I been lucky, the account would have been with another bank and I would have never found out about it. Unfortunately, it was at the same bank as the rest of his accounts and was located when I went to transfer them.

2) While I could ignore this liability, it will eventually come back to the estate (especially now that the receiving account has been closed) and dealing with it after the distribution will be significantly more complicated.

3) Even if my b-in-law were entitled to keep receiving the pension, he still needed to notify the pension administrator of my m-in-law's death... Similarly, had he been a beneficiary and was legally receiving the pension, I'd be obligated to inform them of his death.

That all said, I contacted the state pension administrator today and they were extremely professional (and quite nice, actually). I've provided them with death certificates, etc. and they'll start an investigation to determine the exact liability.

rated:
DTASFAB said:   
atikovi said:   
BigFatCat said:    my brother-in-law passes away and I'm named the administrator of the estate. 
  Named by who? Can't you decline?

  I'm suspecting OP's wife has now caught the windfall from which she was previously excluded, which is why OP should absolutely want to maintain as much control as possible of everything that happens from here on out.

  No windfall... total is low six figures divided three ways.  Other b-in-law or my wife would have done a fine job and have an excellent relationship, so no issue having either of them serve... just circumstances (job situations, geographic location, financial acumen, etc). made it easier for me to handle.

Skipping 8 Messages...
rated:
BigFatCat said:   So, my mother in law passed away a few years ago... both her Social Security and a military pension (she was receiving survivor benefits on my F-in-Law's pension) were 'automatically' cancelled. My brother-in-law was both the executor of the estate and the sole beneficiary.

Fast forward a few years... my brother-in-law passes away and I'm named the administrator of the estate.  In working with the bank where I knew his checking/savings were, I find out that he still had a joint account with my m-in-law and was still receiving my M-in-Law's pension payments from a state pension fund (again survivor benefits on a pension of F-in-Law).  Total amount received since her death is in the range of $35,000.

My plan is basically to call the pension administrator, explain the situation and see how they react.  There are enough assets in the estate to cover the 'erroneous' (there's a much stronger word I've been using) payments and I have no issue with making that payment.

Any thoughts?  Pitfalls?

TIA

  Your brother in law, as executor, should have notified the state pension administrator that his mom passed away. Presumably, he was aware of the fact that he was receiving his mother's pension, but there is no way to prove that. He may have thought he was a beneficiary or just overlooked the account (that is less likely if he was making his own deposits and withdrawals from it).

  You, as the executor of your BIL's estate, ought to call the state pension folks and let them know that your BIL has died and that the  pension deposits being made to his account should stop.  They will likely catch on and see that the payments were never intended to go to him.  On the other hand, you may have misread the situation and there is no need to "prime" the person to inquire about a clawback or mistakenly assume one is required.  (It may not be a mistake, but no reason to assume wrongdoing here. Just report what you know, that your BIL has passed away and if they say the money was going to your MIL, tell them when she passed away as well.  If you are correct, they will want the money back, with interest.  You will agree to give it back to them without interest and settle somewhere in between.

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