by vmarshall » Mon Mar 30, 2009 06:17 pm
Dad passed. If mine and my siblings names are on an insurance policy. His estranged wifes name is first on the policy. Siblings and my self are all adults, Shouldn't we have a right to veiw the policy?
Also his sister forced him to change his bank accounts to her name. He did not want to but she insisted. What rights do we have. What can we do?
Also his sister forced him to change his bank accounts to her name. He did not want to but she insisted. What rights do we have. What can we do?
Posted: Fri Apr 03, 2009 12:12 pm Post Subject: insurance
LORI....I was talking to my sister about 'adding' her to be ANOTHER 'Secondary' to my policy (besides my son). She said "she din't understand the process of all of this" and she wanted me to talk to my brother-in-law about it. I tried to explain this the best way I knew how. It's just frustrating....I want to put someone's name I trust.
Posted: Sun Apr 05, 2009 04:41 pm Post Subject:
Since we're on the topic of beneficiaries, there's another issue that could loom large on the estate taxation front, and I bet there's a few of you out there who are in this position.
Do you own the life insurance policy that covers your own life? :?: In other words, are you both the owner and the insured under a contract? :?: This is known as "first-party ownership" of a life insurance policy: when the policyowner and the insured are the same person. If you were to die having first-party ownership of a policy- your estate will be grossed-up by an amount equal to the life insurance death benefit paid. Even if you don't have a taxable estate because you "don't own enough stuff," without prior planning, this will have an adverse affect on your probate costs.
For instance- let's say all of your "stuff" if valued at the time of your death equalled $1,000,000. You also have first-party ownership of a life insurance policy with a death benefit of $500,000, and you die. :!:
Your estate, for taxation purposes, is worth $1,500,000. Thi8s will not be a taxable amount under current federal estate law, but I live in Oregon, and the state exepmption in Oregon is only $1,000,000. So, simply because I owned my own life insurance policy, I went from a non-taxable estate of $1mm to a taxable estate of $500k ($1.5 mm gross estate value- $1mm exemption = $500k taxable). That's gonna cost my estate around $50,000 in tax plus lawyers, probate and the rest of the stuff that goes along with dying! :shock:
There are ways around this goofy "incident of ownership" IRS rule. It's all in the planning!
InsTeacher 8)
Posted: Sun Apr 05, 2009 05:24 pm Post Subject:
INS this is nice illustration with the example.So in conclusion what we can say is that.
Govt exemption laws are applicable for the sum of life insurance money and the property valuation money.So insurance money can also be taxable if it goes beyond the limits of exemption
Posted: Sun Apr 05, 2009 07:18 pm Post Subject:
"It's kind of scary that if you DON'T have a 'Secondary' Beneficary ( providing the 'Primary' one is no longer living), that money can go to an Estate, etc. I'm dealing with the same issue. I have a Life Insurance policy through the Military. I do have a 'Primary' ( very good friend) and a 'Secondary' ( my son). My son is a minor. I'm just trying to decide what to do to 'add' another 'Secondary', in case something happens to me, and my son was STILL a Minor."
Why is this scary? If there wasn't a named beneficiary and the money didn't go to the estate, the insurance company would have no place to pay the money.
Why is the primary your friend? You don't have to answer. It's none of my business. It just seems like your kid would come before your friend.
Anyway, assuming that you want your friend to get your money if you die and your kid to get nothing, you have set it up properly. If your friend dies before you and then you die, the money will go to your son. Since your son is a minor, most likely the court will have your son's guardian set up an UTMA account for your child.
Typically the best thing to do for a minor is to have the secondary beneficiary be, "trustee under the will" or something similar. In other words, talk to your attorney and do some proper estate planning so that your wishes will be carried out.
Posted: Sun Apr 05, 2009 07:23 pm Post Subject:
"It may happen at times that the primary beneficiary may pre decease the policy holder. Therefore, one may add contingent beneficiaries to aviod the benefits to go to the estate, which will then become taxable."
This has zero impact on the taxability of the policy. If the owner and the insured are the same person, it is part of the insured's estate. The beneficiary is meaningless.
Posted: Sun Apr 05, 2009 07:27 pm Post Subject:
"Do you own the life insurance policy that covers your own life? In other words, are you both the owner and the insured under a contract? This is known as "first-party ownership" of a life insurance policy: when the policyowner and the insured are the same person. If you were to die having first-party ownership of a policy- your estate will be grossed-up by an amount equal to the life insurance death benefit paid. Even if you don't have a taxable estate because you "don't own enough stuff," without prior planning, this will have an adverse affect on your probate costs."
Incorrect. It will be part of your taxable estate, but it does not go through probate.
Posted: Mon Apr 06, 2009 01:26 am Post Subject:
It just seems like your kid would come before your friend.
Of course my child comes first,..however......right now he is a Minor. I can't put him down as 'Primary' until he turns 18 years of age.Since your son is a minor, most likely the court will have your son's guardian set up an UTMA account for your child
What is this??..never heard of this.Posted: Mon Apr 06, 2009 01:37 am Post Subject:
Of course my child comes first,..however......right now he is a Minor. I can't put him down as 'Primary' until he turns 18 years of age.
That is incorrect. In fact, if you want the money to go to him or be used for his benefit, he needs to be the beneficiary or there needs to be a trust set up for him.
An UTMA stands for Uniform Trust for Minors Act. An UTMA account is one in which the money must be used to benefit the minor. At the age of majority (depends on the state), he can take over the account.
As it stands now, I think that you said that the beneficiary is your friend. The money would be his to do with it as he pleases.
Posted: Mon Apr 06, 2009 01:45 am Post Subject: insurance
Oh...I never knew that. SERIOUSLY.....I din't know I could put my son as a 'Primary' now. I already have stated how the money would be used, etc. My 'primary' is a VERY good friend of mine. She was my POA when I was overseas, etc. Thanks, again, for the advice. OHH.......can I 'specify' the age i want my son to be ( ie: 25 years ) for him to take over the policy? I just don't think at 18 years old many people can be very responsible.
Posted: Mon Apr 06, 2009 01:51 am Post Subject:
If this is a decent amount of money, it's not ok to do it how you are doing it even if you trust your friend completely. Let's say that it is $500,000. Your friend will get $500,000. Having this money that she isn't supposed to use could cause all sorts of negative implications for him/her. Also, how is she going to give it your your son? She can't give him a large sum without cutting into her gifting exclusion.
The age for an UTMA depends on the state. The better alternative may to set up a trust for this money. With a trust, you can have more control. Your friend can serve as the trustee. You should really talk to an attorney about this.
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