by J Rice » Sat Nov 29, 2008 11:28 pm
I have a terminal disease and I am in the process of a divorce from my wife.
She wants me to put in the divorce papers that she gets half of my life insurance when I pass away. Do I have to let her have it. Is it even negotiable? Can I change benificiaries after the divorce is final?
She wants me to put in the divorce papers that she gets half of my life insurance when I pass away. Do I have to let her have it. Is it even negotiable? Can I change benificiaries after the divorce is final?
Posted: Tue Jan 06, 2009 04:19 am Post Subject:
I can see selling a policy if you are really in dire straights or needed it for medical reasons. I like your idea and thought on the matter Jeremy.
Gee..thanks Firey :oops:
Yeah, life settlement can be an option for policy holders like the OP or someone too old but has no beneficiary to leave the policy money.
The OP can sell the policy ans take the money to invest in better treatment or arrange nursing for him since the wife won't be there to look after him.
The only disadvantage with life settlement is that the newly assigned beneficiary time and again would inquire about your heath, i.e. whether you have died yet or not :wink: but anyways, its a good alternative for many.
~Jeremy
Posted: Tue Jan 06, 2009 10:04 pm Post Subject:
In reading some of the posts here, it is sometimes difficult to distinguish "real life" situations from "hypothetical questions".
You say that you have a "terminal" disease. Has this disease been diagnosed by a physician or do you just feel that you are going to die from an illness?
First of all, I would stay clear of the "life settlements". There are companies and individuals out there who want to make a fast buck on someone else's misfortune and will more than likely only offer you pennies on the dollar for your life insurance proceeds.
Secondly, if you are "terminally ill", as diagnosed by a doctor, you are more than likely disabled and unable to work. If so, your life insurance policy may contain an added benefit called "Premium Waiver". Check your policy and if you have the premium waiver benefit, you may be able to file a claim with your insurance company and have your life insurance remain in force without making any future premium payments out-of-pocket. Once your claim is approved, all future premiums will be paid by the insurance company. If you need any further info on this, you can send me a PM.
Now, about your divorce. Most states have laws that will not allow anyone to disinherit minor children. I have never seen a court require a person in a divorce settlement to maintain life insurance for the benefit of an ex-spouse.
If minor children are involved, one option would be to establish an irrevocable trust for the benefit of the children. You can outline in the trust how the proceeds of the life insurance policy are to be paid for the benefit of the children. Your local bank's trust department can explain everything about an irrevocable trust.
Posted: Tue Jan 06, 2009 10:36 pm Post Subject:
Yes, most reputable insurance companies who sell life insurance offer a "Premium Waiver" benefit. There is a small extra premium for this added benefit and the proposed insured must qualify medically.
Some life insurance companies offer a built-in "Terminal Illness" rider in the life insurance policy. If the insured is diagnosed with a terminal illness and the life expectancy is for a specific period of time (say 6 months), the insured can receive a set percentage (maybe 50%) of the life insurance proceeds while still living. This benefit is designed to help defer the costs of hospice care or medical treatment required by the terminal illness.
I don't know when this particular person bought the policy, so the "terminal illness" rider may not have been available.
It is very important to know and understand your life insurance policy.
If you don't understand it, ask questions.
Posted: Wed Jan 07, 2009 11:22 am Post Subject: insurance
In a Life Insurance policy, can you SPECIFY how old you children should be to obtain the Life Insurance?...I mean, if they are a Minor now, and you want to wait until the child is 25 years old to get the money, should you be specific about that request? Doe 'this' go for Military and 'civilian' Life, as well?
Posted: Wed Jan 07, 2009 01:31 pm Post Subject:
First of all, I don't understand how my posts made in response to another appeared as though I posted twice. :roll:
In a Life Insurance policy, can you SPECIFY how old you children should be to obtain the Life Insurance?...I mean, if they are a Minor now, and you want to wait until the child is 25 years old to get the money, should you be specific about that request? Doe 'this' go for Military and 'civilian' Life, as well?
In very simple financial planning, there are two very important documents:
(1) Will
(2) Life Insurance Policy
The Will obviously names "beneficiaries" of estate assets outside life insurance. The Will is also used to suggest a guardian for minor children in case of premature death. Most often the courts will go along with the deceased person's wishes made in his/her Will.
It is not a good idea to name a minor child as a beneficiary of a life insurance policy. There are several obvious reasons. First of all, a beneficiary must file a claim and complete other necessary paperwork. Secondly, most people would not want to place a large sum of money in the hands of a child.
One way of solving this problem would be to name the "Guardian" of your minor children as beneficiary in the life insurance policy.
Probably the best way to guarantee that the minor children are cared for is to establish a trust. The trust would be named as owner and beneficiary of the life insurance policy. In the trust document you will specifiy how the proceeds of the life insurance are to be paid out. For example: you might want living expenses for the children to be paid by the trustee until the children are age 18 or 20, then the remainder of the trust to be paid in a lump sum.
The rules for naming beneficiaries in a life insurance policy would be the same for military members as they are for civilians.
If you are going to establish a trust for the children, be sure and create the trust before you buy the life insurance policy and deal with a professional insurance agent.
Posted: Wed Jan 07, 2009 01:44 pm Post Subject:
Okay I am getting this so far. Now what if you do not think you have someone you trust enough as a trustee for a minor child? What rights does a trustee have? In other words can they help themselves to the childs money whenever they please or can you specify in the will what rights the trustee has?
Also if you do not have a life insurance agent..say the insurance is through work and covers on and off the kob...can you establish this trust through an atty instead of an agent?
Posted: Sat Jan 10, 2009 09:56 pm Post Subject:
This is why they have lawyers.....
Posted: Sat Jan 10, 2009 10:19 pm Post Subject:
Fire I may be wrong but I don't think an agent can 'establish' a trust...they can certainly make the trust the beneficary of a policy but I don't think they establish and file the trust. (i could wrong, but i don't think so)
Posted: Sun Jan 11, 2009 01:51 am Post Subject:
I think after I have all these other matters taken care of I am going to look into this. I never quite understood how power a trustee had. It kind of threw me for a loop. So this trustee could actually drain the trust fund leaving no money for the child in the future? Wow if this is so I may be changing somethings.
Posted: Sun Jan 11, 2009 02:03 am Post Subject:
I like Lori's idea of letting it to the divorce attorney to handle, that would really get her goat, but it would take care of every thing wouldn't it.
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