can spouse touch life ins left to children?

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PostPosted: Thu May 21, 2009 12:03 pm   Post subject:   

Since I've been on this board, SDCharger, you have been told at least 10 times that your son gets nothing when you die if he isn't the PRIMARY beneficiary or if a trust for his benefit is not the primary beneficiary.

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PostPosted: Fri May 22, 2009 4:30 pm   Post subject: insurance  

I hate to disagree,..but...i was told differently by the Insurance company I have my policy through.........it's a 401 (K) through my employment. I've spoken to several people ( on our Insurance board).

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PostPosted: Fri May 22, 2009 6:57 pm   Post subject:   

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I hate to disagree,..but...i was told differently by the Insurance company I have my policy through.........it's a 401 (K) through my employment. I've spoken to several people ( on our Insurance board).


SD a 401k qualified pension plan and a life insurance policy are not one and the same thing.



Regardless, they both have beneficiary designations and if you name your girlfriend as beneficiary it's her money not your son's.



I don't know why you argue with us all the time OR why you post such non-sense. We have no reason to give you incorrect information AND if we did there would be dozens of people who would post and challenge the incorrect information.



Arrow But feel free to believe anything you want. Wink


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PostPosted: Fri May 22, 2009 7:05 pm   Post subject:   

Not that SD will bother going to the link below or even bother reading the information but below are the facts regarding beneficiary designations on 401Ks.



Update Your Beneficiaries

by Denise Appleby,CISP, CRC, CRPS, CRSP, APA



Click THIS LINKY.



Quote:
Have you checked your beneficiary designation for your retirement account recently? If not, you may find that your designated beneficiary is not who or what you think it should be, especially if you have divorced, remarried or had children since your retirement plan account was established. If a long time ago you named a charity as your beneficiary, the charity may no longer exist. While many of us ensure that other important documents such as wills are updated on a frequent basis, we tend to neglect our retirement-account beneficiary designations. Your retirement accounts are not part of your estate and generally not governed by the provisions of your will, so it is important to keep these retirement documents updated.



Outdated Beneficiary Designations

There have been numerous cases of retirement-account owners who have been divorced and remarried but have neglected to update their beneficiary designations accordingly. This can be quite frustrating for their survivors, who must battle in court for a legal determination of the true beneficiary. The court's decision, however, may not necessarily be what the deceased would have wanted.


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PostPosted: Fri May 22, 2009 7:21 pm   Post subject:   

Gary...I went to your site and now understand the difference between a will and a living trust. Thanks so much for the info. I am now going to designate my BF as the trust guardian. In the horrible event that both me and my children were killed in a car accident or something I have designated my brother as my alternate beneficiary.



I was especially glad that I read your site because I do not want anything probated and I was under the impression that a will was a will was a will and did not understand that it HAD to be probated, but do now.



Just to doublecheck, do I understand correctly that a living trust does not have to be probated? And also, can any outstanding debt I may have(car etc.) be attached to those proceeds?



do not have a mortgage so that fortunately is not an issue.



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PostPosted: Fri May 22, 2009 11:48 pm   Post subject: insurance  

On BOTH my Life Insurance policy ( through the Military) AND my 401 (K), I have my son as 'Secondary' because he is a minor. I have my POA as 'Primary' for both.

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PostPosted: Fri May 22, 2009 11:50 pm   Post subject: insurance  

there is no reason to read a link that is NOT relevant to me.

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PostPosted: Sat May 23, 2009 12:46 am   Post subject:   

Quote:
I hate to disagree,..but...i was told differently by the Insurance company I have my policy through.........it's a 401 (K) through my employment. I've spoken to several people ( on our Insurance board).




Disagree all that you would like, but you are wrong. If people are telling you differently, they are wrong. More than likely they didn't understand your question. This is very basic stuff. They won't pay directly to a minor, but a minor can be the beneficiary. With your son as the contingent, he is entitled to $0 unless your beneficiary dies before he does.



Quote:
On BOTH my Life Insurance policy ( through the Military) AND my 401 (K), I have my son as 'Secondary' because he is a minor. I have my POA as 'Primary' for both.




No you don't. You have your friend as your primary beneficiary. Your friend may also have your power of attorney. How do I know this? 1) You told us that your friend is the beneficiary. 2) POA is not a valid beneficiary designation.



Ok, so your friend who has your POA is the beneficiary of your life insurance policy. What does this mean? If you die today, all of the money belongs to your friend. Your son is entitled to nothing. What about the fact that she has your POA? It's irrelevant. A POA expires as soon as you die.



Even though you trust her, there are lots of issues.



1) She decides that she deserves the money.

2) She can't give the money to your son without cutting into her lifetime gifting exclusions.

3) Something happens and she needs the money.

4) She is divorced or gets divorced and the judge counts the money as hers (BECAUSE IT IS HERS).

5) There is some sort of judgment against her and she can't legally give money away.



If you want the money to go to your son, he MUST be the primary beneficiary or there must be a trust set up through your will that directs that the money will go to him. The insurance proceeds must get paid to this trust. Your friend can be the trustee.



You have things set up in a way that at worst will cause your wishes to not be followed and at best will have negative consequences to your friend and/or your son.
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PostPosted: Sat May 23, 2009 3:59 am   Post subject:   

Expert, if the primary beneficiary decides to gift the money to the secondary beneficiary, won't that income become taxable for the secondary beneficiary?


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PostPosted: Sat May 23, 2009 4:18 am   Post subject: insurance  

Well, then maybe the Military has told me the wrong information all of these years ( which I don't think they have). I'll check with them. THEY (Military) are the ones who suggested to have my son as a 'Secondary' while he is a Minor.

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PostPosted: Sat May 23, 2009 9:05 am   Post subject:   

The following information I've found in www[dot]military[dot]com/







Hope the information was useful.

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PostPosted: Sat May 23, 2009 10:11 am   Post subject:   

Quote:
Just to doublecheck, do I understand correctly that a living trust does not have to be probated? And also, can any outstanding debt I may have(car etc.) be attached to those proceeds?


Assets that are titled in the name of the trust do not enter probate. This is a big thing to understand. A trust must be funded for the trustee to have control the property.



Funding a trust means nothing more than retitling the assets into the name of the trust.



Regarding creditors ability to reach trust assets this is state specific and depends whether or not your trust contains a spendtrift clause. Generally speaking, after you die creditors are limited to probate court assets and can't reach the assets in the trust.



This DOES NOT mean nor did I say your creditors can't reach trust assets while you're alive, they can.



See this LAWYER LINKY



Quote:
Spendthrift Provisions. Each trust created by this Trust Agreement shall be a spendthrift trust to the fullest extent allowed by law. Prior to the actual receipt of trust property by any beneficiary, no property (income or principal) distributable under any trust created by this Trust Agreement shall, voluntarily or involuntarily, be subject to anticipation or assignment by any beneficiary, or to attachment by or to the interference or control of any creditor or assignee of any beneficiary, or be taken or reached by any legal or equitable process in satisfaction of any debt or liability of any beneficiary, and any attempted transfer or encumbrance of any interest in such property by any beneficiary hereunder prior to distribution shall be void.


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PostPosted: Sat May 23, 2009 11:41 am   Post subject:   

Quote:
Expert, if the primary beneficiary decides to gift the money to the secondary beneficiary, won't that income become taxable for the secondary beneficiary?




No. It would be no different than me giving you $10,000,000. You would not pay any tax. I would! The gifter is responsible for the tax.



Keeping this simple, we all have some money that we are allowed to give away tax free. IF the primary gives the money to the secondary, this would go against the lifetime gifting limit.



In other words, even if SDCharger's friend could be trusted to give the money to SDCharger's son, SDCharger is financially hurting her friend and/or her friend's family.
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PostPosted: Sat May 23, 2009 11:44 am   Post subject:   

"The Military" is obviously not an expert in this issue. There is a reason why nobody is contradicting what I'm telling you.



A minor can't directly receive the money. A minor can be the beneficiary. Don't confuse these two things.

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PostPosted: Sat May 23, 2009 4:14 pm   Post subject:   

Quote:
Expert, if the primary beneficiary decides to gift the money to the secondary beneficiary, won't that income become taxable for the secondary beneficiary?


Tax implications aside this will NEVER happen EVER.



People change, when people die.

This is human nature 101.



If anyone thinks someone who was just paid a $100,000, $250,000, $500,000 or more death benefit in which they have no LEGAL obligation whatsoever to part with their money that person is simply naive' with no experience in actually paying a death claim.



AND...SD...I hope you understand that a Power of Attorney DIES when the Grantor of the Power of Attorney dies.


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