by Guest » Sat Dec 06, 2008 03:25 pm
My boyfriend's father died in August. His divorce was finalized from his ex-wife in April. Apparently, he never changed her as the beneficiary on his life insurance policy. My boyfriend and the siblings really didn't care, because they didn't have the money to begin with-so what would it matter if they didn't have it now.....however the ex-wife agreed to split the insurance money 5 ways--believing it was only fair and she had a decent relationship with all the kids/grandkids. My boyfriend and his siblings had a letter drafted by their lawyer stating that the ex-wife agrees to split the life insurance money and she signed it. It was sort of her suggestion. After all, their dad divorced her (and on a side note, his reasons for divorcing her had something to do with him pulling his retirement out early upon her suggestion so that she could place some money in an acct that would draw interest and some in the bank acct to pay bills with, only to find out that the money disappeared and she began using his credit card to pay for bills, subsequently causing my boyfriends dad to file for bankruptcy). My boyfriend got a letter in the mail yesterday from his step-mom stating she's going to be keeping all the insurance money basically because she feels entitled to it. She rattled off a list of things she has done that are only simply things a nice person would do without payment. (claims she paid his cell phone bill for a year, a gas bill in 2/08, their joint tax return in 2007, and has been feeding the cats since his death and mailing his mail to my boyfriend's sister. It's so ridiculous....however, my question is this.
Can she get away with this if she signed a notarized document stating she agreed to split the insurance money? After all, they were divorced and it was more than likely an oversight on his part. Also, would something like this be suitable for civil court and how long should it take???
Thanks all.
Can she get away with this if she signed a notarized document stating she agreed to split the insurance money? After all, they were divorced and it was more than likely an oversight on his part. Also, would something like this be suitable for civil court and how long should it take???
Thanks all.
Posted: Sun Dec 06, 2009 07:44 pm Post Subject:
Max, it's VERY dangerous to know things that aren't true. You really need to ask more questions and do less pontificating.
1)You are wrong that it $2,000,000 is the best case scenario. I'm not saying that it won't be $2,000,000, but there is no reason to make an assumption that they will lower from where it is now.
2)Yes, a life insurance applicant must sign an application. Yes, nobody can sign in place of the insured. However, it is NOT a legal requirement that an insured who isn't the owner sign a life insurance application.
Ex. Max is my employee. He is my best employee. I want to buy a $1,000,000 policy on him without his knowledge. It is absolutely possible to do this!
Posted: Mon Dec 07, 2009 06:55 pm Post Subject:
Max, it's VERY dangerous to know things that aren't true. . . . However, it is NOT a legal requirement that an insured who isn't the owner sign a life insurance application.
You are so wrong, Fakadur. First, as to your subpoint (2).
How does anyone other than the insured provide the federally-required HIPAA consent to release medical records? How does anyone other than the insured give consent to HIV/AIDS testing (required in California and most other states -- unless the insurer does not test anyone for the diseases)?
Life insurance contracts are two-party contracts between the insurer and the insured When an owner/applicant other than the insured is also involved, the contract is known as a "third-party contract". The insured CANNOT lwafully be left out of the process.
As you will see in the actual life insurance application examples provided in the attachment, the insured is required by the insurer (AKA: meeting the legal requirement of contract law to form a contract between insurer and insured) to provide their signature attesting to the correctness of answers provided in the application and, since the passage of HIPAA in the 1990s, the required consent to obtain/release "protected medical information."
So, to what country were you referring? No US-issued life insurance application for an adult will be received by an insurer without the insured's signature. Even Prudential requires insureds as young as age 8 to sign their application (when otherwise being submitted by their adult parent/guardian who has legal capacity to contract on the child's behalf).
And here are some sections from the California Insurance Code that bear relevance to the general discussion of applying for insurance. In this regard, California law is not unlike insurance law in most other states.
CIC 286. An interest in property insured must exist when the insurance takes effect, and when the loss occurs, but need not exist in the meantime; and interest in the life or health of a person insured must exist when the insurance takes effect, but need not exist thereafter or when the loss occurs.
CIC 10110.1 (d) An insurable interest shall be required to exist at the time the contract of life or disability insurance becomes effective, but need not exist at the time the loss occurs.
CIC 10110.1 (e) Any contract of life or disability insurance procured or caused to be procured upon another individual is void unless the person applying for the insurance has an insurable interest in the individual insured at the time of the application.
CIC 10110.2. An insurer shall be entitled to rely upon all statements, declarations, and representations made by an applicant for insurance relative to the insurable interest that the applicant has in the insured, and no insurer shall incur any legal liability except as set
forth in the policy, by virtue of any untrue statements,
declarations, or representations so relied upon in good faith by the insurer. [NOTE: answers to medical history questions in individual life applications is not "relative to the insurable interest". Only in the case of minor applicants will an insurer rely on the health statements made by an adult about the minor child. All others must be made by, and signed for by, the insured.]
CIC 10110.3. (a) An insurer may not issue an individual life insurance policy to an applicant that insures the life of the applicant's spouse unless the applicant's spouse has signed the policy application or has otherwise been notified in advance of the issuance of the policy.
CIC 10113. Every policy of life, disability, or life and disability insurance issued or delivered within this State on or after the first day of January, 1936, by any insurer doing such business within this State shall contain and be deemed to constitute the entire contract between the parties and nothing shall be incorporated therein by
reference to any constitution, by-laws, rules, application or other writings, of either of the parties thereto or of any other person, unless the same are indorsed upon or attached to the policy; and all statements purporting to be made by the insured shall, in the absence of fraud, be representations and not warranties. Any waiver of the provisions of this section shall be void.
Your "example" sucks! "Best employee" or otherwise, you are not going to be able to apply for insurance on his life, regardless of who or what the beneficiary is, without his knowledge and written consent/signature on the application. California law (several states have followed this lead) in the aftermath of the "Wal*Mart" incident in 2002 or 2003 specifically prohibits an employer from obtaining "corporate-owned life insurance" (and, no, you don't have to be incorporated to obtain COLI) in which it is the beneficiary if the employee is not an "exempt" employee (defined in both state and federal labor law). The whole CIC section is far too long to print here, but you can look it up: CIC 10110.4 Insurance obtained without the employee's consent is fraudulently obtained and the policy would be void upon the insurer learning the truth.
Now, as to estate taxes, your subpoint (1), YOU need to do a little more study on the issue. Because it is not necessary for Congress to do ANYTHING in the coming 12 months for the following to occur. If they do something, it will likely be to set the exemption limit somewhere in the vicinity of $2,000,000. They are HIGHLY UNLIKELY to continue the 2009 exemption of $3.500,000 after 12-31-2010, because they need the revenue to balance the Obamacare cost equation.
Anyway, here's the reality that Congress established in 2001 when it voted to enact EGTRRA. You can find this information anywhere on the Internet. The following excerpt is taken from Wikipedia in it's entirely:
Future of the Estate Tax and Capital Gains Taxes on Inherited Property
Congress has passed tax laws that have made numerous, temporary changes to both the estate tax rate and the exemption amount. Since 2002, the top rate has decreased incrementally from 50%, and the exemption amount has increased incrementally from $1 million. In 2009 the rate is 45% and the exemption amount is $3.5 million. On January 1, 2010 a "one year repeal" of the tax is scheduled to be effectuated by a temporary, one-year-only rate of 0%, but on January 1, 2011 the estate tax is scheduled to return at a top rate of 55% and the exemption amount is scheduled to drop back down to $1.0 million.[citation needed] Many legislative tax analysts suspect that Congress and President Obama will not permit this legislatively scheduled repeal-and-increase scheme to actually go into effect between January 1, 2010 and January 1, 2011. To avoid the temporary repeal and subsequent reinstatement of the tax at the higher rate, the 2009 rate of 45% and exemption amount of 3.5 million could be extended beyond December 31, 2009, or the rate and exemption amount could be permanently fixed at some amount greater than zero before that date.
If the law does not change, for 2010 property transferred from decedents will be treated as if it is transferred by gift. This means the basis of the property for calculating capital gains when the recipient eventually sells the property will be the same basis as in the hands of the decedent. This is generally called carryover basis. However most recipients will effectively get the same result they would receive under present law, because section 1022 allows the executor of an estate to allocate up to 1.3 million in basis for singles and 3 million for surviving spouses to the property of the estate. This will effectively give most recipients a tax basis in the property equal to the full market value ie. "step up basis". See 26 U.S.C. § 1022.
Given the state of affairs in Washington, DC, where the major distraction is finding 60 votes in the Senate to bring Obamacare to a vote is becoming increasingly unlikely, there has not been, and will not be, any congressional action to extend the 2009 $3,500,000 exemption and tax rate into 2010 as speculated above.
So 2010 will be the perfect year in which to die. 2011 and beyond are not such good prospects. The estate tax could be, as I stated, as bad as a $1,000,000 exemption or, my best guess at a "best-case" scenario, $2,000,000. Anything higher is a "gift" from Congress. But if a "public option" makes its way into Obamacare, there is no way to finance it without the expected revenue from estate taxes at a taxable level significantly lower than $3,500,000 and a statutory 55% rate.
So go do your homework and report back.
Posted: Mon Dec 07, 2009 06:57 pm Post Subject:
Max, it's VERY dangerous to know things that aren't true. . . . However, it is NOT a legal requirement that an insured who isn't the owner sign a life insurance application.
You are so wrong, Fakadur. First, as to your subpoint (2).
How does anyone other than the insured provide the federally-required HIPAA consent to release medical records? How does anyone other than the insured give consent to HIV/AIDS testing (required in California and most other states -- unless the insurer does not test anyone for the diseases)?
Life insurance contracts are two-party contracts between the insurer and the insured When an owner/applicant other than the insured is also involved, the contract is known as a "third-party contract". The insured CANNOT lawfully be left out of the process.
As you will see in the actual life insurance application examples provided in the attachment, the insured is required by the insurer (AKA: meeting the legal requirement of contract law to form a contract between insurer and insured) to provide their signature attesting to the correctness of answers provided in the application and, since the passage of HIPAA in the 1990s, the required consent to obtain/release "protected medical information."
So, to what country were you referring? No US-issued life insurance application for an adult will be received by an insurer without the insured's signature. Even Prudential requires insureds as young as age 8 to sign their application (when otherwise being submitted by their adult parent/guardian who has legal capacity to contract on the child's behalf).
And here are some sections from the California Insurance Code that bear relevance to the general discussion of applying for insurance. In this regard, California law is not unlike insurance law in most other states.
CIC 286. An interest in property insured must exist when the insurance takes effect, and when the loss occurs, but need not exist in the meantime; and interest in the life or health of a person insured must exist when the insurance takes effect, but need not exist thereafter or when the loss occurs.
CIC 10110.1 (d) An insurable interest shall be required to exist at the time the contract of life or disability insurance becomes effective, but need not exist at the time the loss occurs.
CIC 10110.1 (e) Any contract of life or disability insurance procured or caused to be procured upon another individual is void unless the person applying for the insurance has an insurable interest in the individual insured at the time of the application.
CIC 10110.2. An insurer shall be entitled to rely upon all statements, declarations, and representations made by an applicant for insurance relative to the insurable interest that the applicant has in the insured, and no insurer shall incur any legal liability except as set
forth in the policy, by virtue of any untrue statements,
declarations, or representations so relied upon in good faith by the insurer. [NOTE: answers to medical history questions in individual life applications is not "relative to the insurable interest". Only in the case of minor applicants will an insurer rely on the health statements made by an adult about the minor child. All others must be made by, and signed for by, the insured.]
CIC 10110.3. (a) An insurer may not issue an individual life insurance policy to an applicant that insures the life of the applicant's spouse unless the applicant's spouse has signed the policy application or has otherwise been notified in advance of the issuance of the policy.
CIC 10113. Every policy of life, disability, or life and disability insurance issued or delivered within this State on or after the first day of January, 1936, by any insurer doing such business within this State shall contain and be deemed to constitute the entire contract between the parties and nothing shall be incorporated therein by
reference to any constitution, by-laws, rules, application or other writings, of either of the parties thereto or of any other person, unless the same are indorsed upon or attached to the policy; and all statements purporting to be made by the insured shall, in the absence of fraud, be representations and not warranties. Any waiver of the provisions of this section shall be void.
Your "example" sucks! "Best employee" or otherwise, you are not going to be able to apply for insurance on his life, regardless of who or what the beneficiary is, without his knowledge and written consent/signature on the application. California law (several states have followed this lead) in the aftermath of the "Wal*Mart" incident in 2002 or 2003 specifically prohibits an employer from obtaining "corporate-owned life insurance" (and, no, you don't have to be incorporated to obtain COLI) in which it is the beneficiary if the employee is not an "exempt" employee (defined in both state and federal labor law). The whole CIC section is far too long to print here, but you can look it up: CIC 10110.4 Insurance obtained without the employee's consent is fraudulently obtained and the policy would be void upon the insurer learning the truth.
Now, as to estate taxes, your subpoint (1), YOU need to do a little more study on the issue. Because it is not necessary for Congress to do ANYTHING in the coming 12 months for the following to occur. If they do something, it will likely be to set the exemption limit somewhere in the vicinity of $2,000,000. They are HIGHLY UNLIKELY to continue the 2009 exemption of $3.500,000 after 12-31-2010, because they need the revenue to balance the Obamacare cost equation.
Anyway, here's the reality that Congress established in 2001 when it voted to enact EGTRRA. You can find this information anywhere on the Internet. The following excerpt is taken from Wikipedia in it's entirely:
Future of the Estate Tax and Capital Gains Taxes on Inherited Property
Congress has passed tax laws that have made numerous, temporary changes to both the estate tax rate and the exemption amount. Since 2002, the top rate has decreased incrementally from 50%, and the exemption amount has increased incrementally from $1 million. In 2009 the rate is 45% and the exemption amount is $3.5 million. On January 1, 2010 a "one year repeal" of the tax is scheduled to be effectuated by a temporary, one-year-only rate of 0%, but on January 1, 2011 the estate tax is scheduled to return at a top rate of 55% and the exemption amount is scheduled to drop back down to $1.0 million.[citation needed] Many legislative tax analysts suspect that Congress and President Obama will not permit this legislatively scheduled repeal-and-increase scheme to actually go into effect between January 1, 2010 and January 1, 2011. To avoid the temporary repeal and subsequent reinstatement of the tax at the higher rate, the 2009 rate of 45% and exemption amount of 3.5 million could be extended beyond December 31, 2009, or the rate and exemption amount could be permanently fixed at some amount greater than zero before that date.
If the law does not change, for 2010 property transferred from decedents will be treated as if it is transferred by gift. This means the basis of the property for calculating capital gains when the recipient eventually sells the property will be the same basis as in the hands of the decedent. This is generally called carryover basis. However most recipients will effectively get the same result they would receive under present law, because section 1022 allows the executor of an estate to allocate up to 1.3 million in basis for singles and 3 million for surviving spouses to the property of the estate. This will effectively give most recipients a tax basis in the property equal to the full market value ie. "step up basis". See 26 U.S.C. § 1022.
Given the state of affairs in Washington, DC, where the major distraction is finding 60 votes in the Senate to bring Obamacare to a vote is becoming increasingly unlikely, there has not been, and will not be, any congressional action to extend the 2009 $3,500,000 exemption and tax rate into 2010 as speculated above.
So 2010 will be the perfect year in which to die. 2011 and beyond are not such good prospects. The estate tax could be, as I stated, as bad as a $1,000,000 exemption or, my best guess at a "best-case" scenario, $2,000,000. Anything higher is a "gift" from Congress. But if a "public option" makes its way into Obamacare, there is no way to finance it without the expected revenue from estate taxes at a taxable level significantly lower than $3,500,000 and a statutory 55% rate.
So go do your homework and report back.
Posted: Tue Dec 08, 2009 01:12 am Post Subject:
Max, that was some long post!
Let's make the following assumptions.
1) I have an insurable interest in your life.
2) You are not my hourly employee.
3) You are not my wife.
4) An insurance company is willing to issue a policy without medical information from you.
Now, please show us anything in the California insurance code that makes this illegal.
Here's a clue for you. It's legal!
This is strike three for you, Max. You were wrong about default beneficiaries. You were wrong in your understanding of how secondary guarantees in UL policies work and now you are wrong about this.
I would take no joy in pointing out your mistakes if you didn't act like such a know it all.
Posted: Tue Dec 08, 2009 01:15 am Post Subject:
Thanks for the Wikipedia plagiarism in regards to estate taxes. My guess is $3.5 million. Your guess is $2.0 million. Who confuses a guess with a best case scenario...other than you?
Posted: Tue Dec 08, 2009 01:47 am Post Subject:
Farla
It's only plagiarism if you use the material without attributing its source, which I plainly did, as you acknowledged. Read other sources in the financial planning community to get a sense of what Congress is thinking. It's not $3.5 million.
Sdlkfjas . . . your post said you wanted a $1,000,000 policy on your employee. No insurer underwrites that much without a medical app. Try again.
The specifics of who signs a contract, if you don't also see it delineated in the insurance code, is covered under contract law (Civil Code, etc. -- depends on the state). For a contract to have legal force, it must be voluntarily entered into by the parties to the contract. The insured is ALWAYS a party to an insurance contract -- language internal to the policy acknowledges that, and states that the insured will become the new owner if the existing owner dies prior to the insured and has not assigned the policy to another party. If not also the owner, the insured simply has no power to exercise the rights of ownership. But the owner doesn't get a contract of life insurance on a person without their knowledge and consent. Sorry.
Companies such as TransAmerica (and others) that market "jet issue" non-underwritten policies for amounts up to $50,000 still require the signature of the insured on their applications, because they know it's not going to be a legal contract without the signature. Obviously, as I've already alluded to, anyone could submit a fraudulent app for insurance -- it wouldn't be a first -- with a forged signature. But your scenario doesn't wash.
So, I ask you to show us an insurance company that writes $1,0000,000 policies on adult persons with capacity to contract who do not sign the application. There are none.
Posted: Tue Dec 08, 2009 02:05 am Post Subject:
I can very easily prove that you are wrong on this one. I'll make a deal with you. I'll prove you wrong. In exchange for giving you this learning experience, I would like you to start a thread that says, "My name is Max Herr and I don't know what I don't know."
If I'm wrong, I'll agree to stop posting here.
We'll let someone impartial like Insurance Teacher or Insurance Investigator be the judge of who is correct.
Do we have a deal?
Posted: Tue Dec 08, 2009 02:26 am Post Subject:
I'll start a thread on the topic of required signatures on a life insurance application.
Agreed?
Posted: Tue Dec 08, 2009 12:42 pm Post Subject:
Am I agreeing that you are starting a new thread or are we agreeing that you will start a thread that says, "My name is Max Herr and I don't know what I don't know"?
I'll gladly supply the proof once you agree that you'll do this.
Posted: Fri Dec 11, 2009 02:47 am Post Subject: insurance
(Hopefully no one will 'bite my head off' over this...) I was looking on the website that I have Life Insurance for my son. I was scanning different 'options', etc. I DID come across a section that talks about insuring someone who is "18 years of age and older." According to what I read, the Insured (if 18 years or older) DOES have to sign a Life Insurance policy. So....if my son was 18 years old now, he would have to sign the Life Insurance policy that I started on him.
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