Family loses fight for grandmother’s life insurance money

Posted at 9:47 PM, May 09, 2018
and last updated 2018-08-08 15:46:15-04

It’s a bizarre case surrounding the death of longtime Woodland Park grandmother Carol Colby.

In April, News 5 Investigates revealed a bitter battle between three first responder agencies and Colby’s family over her life insurance money.

The fight has ended, but not the way the family had wanted.

Colby, 86, had two clear wishes when she died. She wanted to give donations to multiple emergency responder agencies and have all of her debts paid off. Unfortunately, when the names listed in your last will and testament are different from who you name in your life insurance policy, you can end up in a legal mess.

Kellie Johnson and her family inherited their grandmother’s house, but they also inherited approximately $30,000 in debt.

As an executor of Colby’s last will and testament, Kellie is responsible for the bills.

“A creditor can put a claim against the estate,” Kellie told News 5 Investigates in April. “That executor can be ordered by a court to liquidate their assets to satisfy that debt.”

Kellie took a closer look at her grandmother’s finances and discovered there were two life insurance policies which she indicated had approximately $60,000 that was set to be distributed among the following four agencies:

1) Woodland Park Police

2) Teller County Search and Rescue

3) Teller County Fire Department

4) Woodland Park Ambulance Service (renamed as Ute Pass Regional Ambulance District)

“I told each one of them first off, I know legally you don’t have to do it but I’m just asking as her granddaughter, would you please respectfully decline the money so that we could pay her debts, pay her bills, and save her house so it’s not having to be sold to pay the bills,” Kellie said.

Kellie said she offered to donate the rest of the money after the debts were paid. The Teller County Fire Department agreed to reject the cash, but Teller County Search and Rescue had a different opinion.

“This money will greatly benefit the organization and it was specifically set aside for us to use,” Teller County Search and Rescue President Jake “John” Slaughter said. “Yes, she doesn’t want to sell the house and you know what, she doesn’t have to sell the house. She can take out a mortgage.”

That comment didn’t sit well after our initial story and viewers immediately began flooding Search and Rescue’s Facebook page with negative comments.

The social media page has since been removed.

“You’re more worried about how much money you’re going to get than helping this family,” Kellie said in regards to Slaughter’s statement.

During the April 19 Woodland Park City Council meeting, members voted to keep their cut of the insurance money.

Soon after that meeting, the Ute Pass Regional Ambulance District advised Kellie that the board had decided to accept their portion of the money as well.

“Everything in this house will have to be sold piece by piece until the debts can be satisfied,” Kellie said.

While all three agencies could have declined the money, they were legally within their right to accept it.

Colby’s family has since set up a GoFundMe page to cover funeral expenses and other debts.

Kellie has argued her grandmother was in the process of changing her life insurance beneficiaries, but passed away before the paperwork could be submitted. Council and board members could only base their decision on Kellie’s testimony and the beneficiary paperwork.

Frequently asked questions:

Q: Is a Will different from a life insurance policy?

A: Yes. Life insurance policies are paid out to a beneficiary, regardless of whether the beneficiary is named in a Will. These are two separate documents.

Q: Does a Will take precedent over a life insurance policy or annuity?

A: No. Although wishes may be written out in a will, it does not change the beneficiary of a life insurance policy.