by Guest » Fri Jul 20, 2012 03:42 am
My dad switched his life insurance policy from me, and my sister to just me as the benificiary about 2 weeks before he died. i am wondering if she can dispute this because she is very angry about it. My dad was not ill when he did this...he died from complications from A.R.D.S disease...it was fast and unexpected. The only reason he took her off is because she is not very responsible...she got married to a man from Isreal, just to help him become legal, now they are going through a messy divorce and my dad did not want her to lose her half. Even though I am the sole benificiary he told me to still give her half...and that is exactly what I will do..but she is pitching a fit saying she is going to call the life insurance company and tell them I forged our dad's signature ( i assure you I did not) can she put getting his claim on hold by doing this???
Posted: Fri Jul 20, 2012 07:15 am Post Subject:
Even though I am the sole benificiary he told me to still give her half...and that is exactly what I will do..but she is pitching a fit saying she is going to call the life insurance company and tell them I forged our dad's signature ( i assure you I did not) can she put getting his claim on hold by doing this??
YES, your sister can tie up the insurance proceeds as you ponder.
There is something else to consider. If you were to give your sister "half" of the proceeds, it would be considered a "gift" from you to her by the IRS, and any amount given in excess of $13,000 in one year creates a gift tax liability for YOU, not your sister. So, you might want to reconsider that plan.
If there is a serious challenge to the issue of a change of beneficiary so close to the death of the insured, the insurance company will probably not want to try to pick a winner in that shouting match. They would most likely file an "interpleader" action with the Probate Court, and pay the insurance proceeds to the Court for its lawful disposition.
That's where you could "disclaim" 1/2 of the proceeds in favor of your sister, in which case each of you will receive tax free money, thanks to your Dad who wisely chose to keep his life insurance in force for you.
If you were serious about splitting the money with your sister, then you can even encourage the insurance company to file the interpleader, so that you can "tell it to the judge."
Posted: Fri Jul 20, 2012 03:30 pm Post Subject:
1)Depending upon the amount of money involved, it may be easy to get around the gifting issues.
2)In order to follow her dad's wishes, it is not a good idea to disclaim half the money in favor of her sister. Her dad's wishes would not be followed if the divorce isn't completed.
3)There is a huge difference between disclaiming something and disclaiming something in favor of someone else.
Ex. I am the sole beneficiary of my Dad's $1,000,000 life insurance policy. My brother, Tim, is the contingent beneficiary.
I can disclaim the proceeds or I can disclaim the proceeds in favor of somebody. If I do the latter, I have just made a $1,000,000 gift to that person. If I do the former, no gifting has taken place.
In other words, disclaiming in favor of her sister results in a gift being made.
Posted: Fri Jul 20, 2012 06:39 pm Post Subject:
Thank you both for your answers
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