by picklesandchampagne » Wed May 20, 2009 02:06 am
I have been amicably separated from my husband of 18 years for 4.5 years. I took out a 100k life insurance policy on myself which I pay for.
I have two children...13 and 17 that I have as the beneficiaries. Is he entitled to the management of those benefits if I die and the children are still minors?
Is he entitled to the Florida spousal 30% of the benefits since we are still legally married?
He cannot manage money at all. My fear is that he can take those benefits and spend them improperly just by virtue of the fact that he would be the remaining parent.
I have two children...13 and 17 that I have as the beneficiaries. Is he entitled to the management of those benefits if I die and the children are still minors?
Is he entitled to the Florida spousal 30% of the benefits since we are still legally married?
He cannot manage money at all. My fear is that he can take those benefits and spend them improperly just by virtue of the fact that he would be the remaining parent.
Posted: Mon May 25, 2009 01:14 am Post Subject:
SDCharger, please don't give up on this excruciatingly painful exchange. It's very difficult to have a conversation with you because you have a serious problem, but don't realize it. Because you don't understand that you have a problem, I'm banging my head against the wall trying to get you to fix something that you don't know is broken.
I hope that you realize that the reason that I'm hammering you on this subject has nothing to do with me being a jerk. I am trying to be helpful. Nobody is contradicting anything that I have said because I am correct.
First of all, look at your will. Wills don't name someone to have Power of Attorney. POA's die when you do. You may have named her executor of your estate. She may be named guardian of your child. A trust may be formed and she may be the trustee who controls the money. She does not have POA when you die.
Please correct me if I'm wrong. Your friend is the beneficiary. Your son is the contingent beneficiary.
Let's assume for a second that you just messed up your terminology for a second. Your friend is going to be the trustee for the money that is going to go to your son. Your will spells out everything that is going to go to him and at your death, a trust will be set up and everything will be put into this trust that your friend will manage for the benefit of your son.
Let's look at what happens when you die. Life insurance is distributed based upon beneficiary designation. "Mary Smith" is your beneficiary. Junior SDCharger is the contingent beneficiary. Because Mary Smith is still alive, all of the money goes to "Mary Smith". Your will is irrelevant. The fact that she is trustee is irrelevant. The money has been left personally to Mary Smith. The money belongs 100% to her.
If you want the money to go to your son, but for Mary Smith to control this money for him, the primary beneficiary needs to be changed to something along the lines of "Trustee Under the Will of the Insured". You then, in your will, name Mary Smith as the trustee of a trust for Junior. This way, the money will legally belong to your son and not to Mary Smith.
What if you want Mary Smith to personally have some of the money? You would have 2 primary beneficiaries. Let's say that you wanted a 50/50 split. The first primary beneficiary would be "Mary Smith 50%". The second primary beneficiary would something along the lines of "Trustee Under the Will of the Insured 50%".
By naming "Mary Smith" the primary beneficary and Junior as the contingent, you have effectively cut Junior out completely. He gets NOTHING!!!
It's ok that the military has guidelines. I guarantee that the military guidelines are not written in such a way that minor children can't receive anything. Instead, they may be written that they can't receive anything directly. In other words, some sort of trust must be set up for them. This is common. The work around for this is not naming someone other than your child. This does not work. The work around is naming a trust that is for the benefit of your child.
What you are doing is perfectly kosher with the military. They don't care that you are leaving everything for your friend and nothing for your son.
Posted: Mon May 25, 2009 01:53 am Post Subject:
..............AGAIN ( listen up this time!!),.......my POA IS my Beneficiary, along with my son. on my Will, she is stated as POA. On my Life Insurance, her NAME is there. The Military has guidelines for Life Insurance policies ( I think I was clear when I posted this, as well). OBVIOUSLY..........SOME people have trouble accepting their guidelines. However...........that's how it is.
You are correct that the military has very specific guidelines...However, there is a way arround it that will offer you the most protection possible. I have dealt with several insurance cases regarding both active duty and retired army personnel.
You need to set up a special trust and an estate. Your best friend can absolutely be your Power of Attorney...but it is not so wise to have her listed as beneficiary on the life insurance policy and here is why...
This may be unlikely, but possible...If you pass away and your POA, very upset, wrecks her car and is killed on the way to the funeral...Your money may very well go to her estate. It could be challenged, but would be very difficult and create an incredible situation.
You can set up a trust for your son and name your POA as guardian...but you will also have to have a contingency plan and name other guardians as well. You also can set up an estate in your name and your POA can be executor, but your will can specify that everything be managed for your son's best interest. (Be specific...college...etc.)
You CAN have your estate OR the trust listed as the primary beneficiary no matter how old your son is. If you have any questions on how to set it up...let me know!
Posted: Mon May 25, 2009 01:55 am Post Subject:
and I forgot to reiterate...Power of Attorney ceases at death. A POA can only sign when you would sign if able (obviously dead people don't sign things).
Posted: Mon May 25, 2009 11:53 am Post Subject:
but it is not so wise to have her listed as beneficiary on the life insurance policy and here is why...
This may be unlikely, but possible...If you pass away and your POA, very upset, wrecks her car and is killed on the way to the funeral...Your money may very well go to her estate. It could be challenged, but would be very difficult and create an incredible situation.
Chris, why use a crazy example? Let's play the odds and go with the assumption that she's not going to get killed on the way to the funeral. The money belongs to the friend. Anyway that you slice it, the money will belong to the friend and not to Junior.
Even if her friend wants to give Junior the money, there is no way for her to do it without negatively impacting her own family (via reduced ability to gift in the future without taxation).
Let's just face the facts that SDCharger is (unintentionally) hurting her friend and/or her child by not using proper* beneficiary titles.
*By "Proper", I mean beneficiary titles that are designed to accomplish what she wants to accomplish.
I have a nagging thought with these conversations with SDCharger that what really is happening here is that she cares more about her friend than her child and she doesn't want to make a change because it might not make her friend happy.
Posted: Mon May 25, 2009 12:52 pm Post Subject: insurance
AGAIN.....my son is a Minor. According to Military guidelines, a Minor CANNOT be 'Primary' Beneficiary. When my son turns 18, I can change him to 'Primary'. There IS nothing to "fix".
Posted: Mon May 25, 2009 02:38 pm Post Subject:
There is a difference that you are completely missing. It does not matter even if you're correct that your son can't be a primary beneficiary.
Let me ask you a "yes" or "no" question. Do you understand that if your friend is your primary beneficiary, when you die, 100% of that money belongs to your friend to do with what she pleases?
Here is another "yes" or "no" question? Do you want the money to all go to your friend?
Here is another one. Do you understand that there is nothing to fix only if you don't care about anything going to your son?
Assuming that you are correct that they won't accept your son as primary beneficiary, let me give you two fixes to this problem that you think doesn't need fixed.
1) Change your primary beneficiary from your friend. Your new beneficiary should be "trustee under the will of the insured". Ask an attorney for the specific wording. Your friend can be the trustee. This is VERY DIFFERENT than having her be the named primary beneficiary.
2) Change your primary beneficiary to somebody who is currently dead (One of your parents, a grandparent, etc.). At your death, the money will go to the contingent. (This is why it's silly to allow a contingent beneficiary to be something that a primary beneficiary can't be.)
You are acting as if the military wants their members to screw their children. That is what you are doing if you die today.
THE ALTERNATIVE TO NAMING YOUR CHILD AS A PRIMARY BENEFICIARY IS NOT NAMING A TRUSTED FRIEND. Sorry to put it this way, but what you are doing is one of the dumbest things that I have ever seen anybody do in 20 years as an advisor.
Posted: Mon May 25, 2009 11:12 pm Post Subject:
SDcharger....This whole thread has prompted me to do some research just out of curiousity because of the controversy.
I went to the SGLI site...for military life insurance. Yes, it does say in fact that the military will not write out a check to a minor. But it highly emphasizes the need for a revokable living trust to be set up. With the minor child as beneficiary and a trustee as the manager of your children's funds.
I have just purchased NOLO's forms for establishing trusts and will be seeing a public notary and dragging my witnesses along with me to ASSURE that my children will get the money that I am designating for them.
I have outlined provisions for their welfare. My 17 year old will receive all of her funds if she is older than 18 upon my death.
My currently 13 year old will have expenses taken care of until he reaches 18 if I am deceased at which point he will be given the balance.
I know you trust your friend, but the reason I am doing this is because I trust no one...even their father who loves them to manage that money correctly. He will get enough to cover the roof over my son's head so that he always has a home, and his father will be in charge of providing everything else.
No one here is asking you to do anything drastic. Just change your beneficiary to your son and then set up a trust. Your strong opposition to this leads me to believe though that you have odd motives for being so combative. Perhaps this friend is more than a friend and you are afraid of offending them? I don't know, but they would never have to know that you changed the beneficiary until after you died. At which point who cares if they are offended. If you set up the trust correctly, your son will be assured of getting his money.
I am surely not an insurance expert, but I read all of the SGLI info. You can name a minor, but the check will be made out to the trust designated for that child, if you have established one. Otherwise the courts will decide who will be the guardian of the account. I also read that the reason this is often misunderstood is because the clerks in different military offices do not fully understand the accepted lingo for leaving your child the funds within a trust situation. I know this is an incredibly long link, but it is just one of the many I found in my research.
http://74.125.47.132/search?q=cache:UqJc2C9jt3sJ:www.lejeune.usmc.mil/legal/Testamentary%2520Life%2520Insurance%2520Trust%2520for%2520Minors%2520Rev%2520080916.doc+can+a+minor+be+named+beneficiary+on+a+military+life+insurance&cd=1&hl=en&ct=clnk&gl=us&client=firefox-a
Cheers, P&C
Posted: Mon May 25, 2009 11:36 pm Post Subject:
Good job, picklesandchampagne. The link is backing up everything that we have been telling SDCharger, including the fact that the minor can be the beneficiary. It just isn't smart to name them instead of the trust because the owner then can't control who will be controlling Junior's money.
Hopefully, since you linked the SGLI info, she'll finally realize that she is doing this incorrectly.
(I hope that she has an open mind instead of digging in her heels.)
Posted: Tue May 26, 2009 01:12 am Post Subject:
Thanks IE. I think we all have her best interests in mind. It is such a simple change to make. It sickens me to think that someone would misspend what little I have to leave my children. i certainly would hate to see it happen to anyone else either.
Posted: Tue May 26, 2009 03:40 am Post Subject: insurance
I KNOW what the SGLI says...thanks anyway ( yeah, right). I refuse to keep repeating myself. I think it's time people 'move on'........don't you think?
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