what if the beneficiary does not want life insurance proceed

by Guest » Mon Jul 20, 2009 09:25 pm
Guest

what if the beneficiary does not want life insurance proceeds? Can it be directed to the estate?

Total Comments: 6

Posted: Tue Jul 21, 2009 02:58 am Post Subject:

Yes of course the proceeds can be directed to the estate but don't you thing you should have asked this question on lefe insurance forum

Posted: Tue Jul 21, 2009 11:15 am Post Subject:

Hi Guest, why do you want to direct the benefits to the estate of the deceased? The life insurance benefit normally doesn't attract tax on it but the death benefit if attached to the estate would be subjected to estate tax.

Posted: Tue Jul 21, 2009 12:30 pm Post Subject:

Why would the beneficiary deny life insurance proceeds? Is it due to the tax consequences?

Posted: Tue Jul 21, 2009 06:03 pm Post Subject:

what if the beneficiary does not want life insurance proceeds? Can it be directed to the estate?



A beneficiary can disclaim the life insurance. The beneficiary can't direct it anywhere.

Yes of course the proceeds can be directed to the estate


Incorrect. When a beneficiary disclaims, the benefit will get paid to the contingent beneficiary.

The life insurance benefit normally doesn't attract tax on it but the death benefit if attached to the estate would be subjected to estate tax.



Whether the death benefit gets paid to a living beneficiary or to one's estate will have no impact on the taxation. In either case, if the insured is the owner, it will be part of his taxable estae.

Why would the beneficiary deny life insurance proceeds? Is it due to the tax consequences?



Yes.

Ex. Mr. Jones dies with a $1,000,000 life insurance policy. Mrs. Jones is the beneficiary. Davey Jones, their son, is the contingent beneficiary. Let’s assume that the future gift and estate tax exclusion is $1,000,000 per person.

Mrs. Jones disclaims the insurance. She has no say in where it goes. It gets paid to Davey. It will be tax free and Mr. Jones has used his $1,000,000 exclusion.

1 year later, Mrs. Jones dies. She has $1,000,000. It goes to Davey tax free.

If Mrs. Jones would not have disclaimed the life insurance (let’s assume 0% growth), when she died her estate would have been worth $2,000,000. There would be an estate tax due on the 2nd $1,000,000. Davey would wind up with less than $2,000,000.

Posted: Sun Aug 10, 2014 10:09 pm Post Subject: beneficiary will not accept money

my husbands sister is a beneficiary of their mothers estate she will not accept money due to her and she does not reply to letters our lawyer sends her what does he do now. this has been going on for three years now. we would like to get this matter resolved.

Posted: Mon Aug 11, 2014 08:28 pm Post Subject:

Sounds like you need a lawyer who knows how to deal with probate law, instead of just stringing you along for three years raking in his legal fees.

A probate court has the same powers of subpoena as any other court, except that this is a civil matter and contempt of court for failure to appear pursuant to a subpoena is only punishable by a fine and not jail time. The sister should have been subpoenaed to appear in court and explain her position . . . THREE YEARS AGO!!!

Add your comment

Image CAPTCHA
Enter the characters shown in the image.