Conference moira::parenting_v3

If your husband owns the policy on you, he can specify that AJ get the proceeds.
Whoever owns the policy gets to specify the beneficiary.  You can do what you 
want a couple of ways.  For instance, your husband's policy can list you as
the beneficiary with AJ as the secondary beneficiary in case you pre-decease him.
Or, you can have something like you as the beneficiary provided you survive him
by 30 days (that is a standard time-frame that gets around death from the same
circumstance such as an accident) with AJ as the secondary. You might also want
to word it such that it goes into trust for AJ, assuming he is still a minor.
And you can do a similar thing on your policy.

And now I need to call my agent to update our life insurance beneficiaries.
Thanks for reminding me.

Regards,
Cathy

    Lyn,
    
    I can't help much with the beneficiary part, but you might want to
    talk to an insurance agent about the different types of life insurance
    available today....and their costs.
    
    I used to have the DEC life insurance at 5X my salary.  This is a
    term life policy (lasts only 1 year) that you lose if you leave the 
    company. The weekly deductions were costing me more than the rate of 
    a traditional "universal life" policy on my own (for $100,000).   
    
    Hmmm, now let me see how much I can remember from our agent...this
    is a little fuzzy because we got our policies a couple of years ago.
    
    Universal life is kind of between "term life" (good for 1 year) and 
    "whole life" (lifetime) policies.  With my universal life policy,
    the rates stay the same for a specified period of time until the
    policy is paid in full.  If you start early/young enough, the policy
    will be paid in full long before your retirement when you may end
    up on a fixed income.  
    
    Conni
    
    After a certain amount has been paid on the UL policy, you may be able 
    to borrow a certain percentage of money from it if you need it.  With 
    the whole life policies your annual premium is higher, but you have a 
    larger amount of cash to draw from if you need to borrow money from it.
    
    
    
    
      

    Some terms :
    
    . Owner ... the person who owns the policy and pays the premiums.
    
    . Contingent owner ... in the event of the death of the owner, the
          contingent owner becomes responsible for the policy
    
    . Life insured ... the insured person ... normally the owner in
          cases where you buy insurance for yourself ... if not the
          owner must have insurable interest in the life insured.
    
    . Insurable interest .... The owner to buy insurance must have an
          insurable interest in the life insured.  For example husband
          insures wife because husband would experience financial
          if the wife dies.  I couldn't buy an insurance policy on, for
          example, George Bush, because if he were to die, it would have
          no direct impact on me ... I have no insurable interest in
          him.
    
    . Beneficiary ... The person or persons to whom the benefits of an
          insurance policy are paid.  There may be one or more
          beneficiaries.
    
    . Secondary beneficiaries ... The person or persons to whom the
          benefits should be paid in the event that one or more of the
          primary beneficiaries die.  Note that by specifying multiple
          beneficiaries and secondary beneficiaries result in all kinds
    	  of dependency clauses and are probably best avoided.
    
    . Estate ... In the event that no beneficiaries are named, or for
          some reason cannot be paid out of the beneficiaries, the benefit
          is paid to your estate and the amount is then divided according
    	  to a will if there is one, or by probate if not.
    
    For ease, undoubtedly the best way is to name a beneficiary, because
    this escapes all the complications of wills and probate and releases
    funds before the will passes probate.
    
    You can name your son, in trust as a secondary beneficiary, but you
    may have to name or identify the trustee ... such as the guardian you
    appoint in your will.  So, if you include secondary beneficiaries,
    be sure to have a will and documented wishes.
    
    
    As to insurance policies, there are now so many types available that
    are so much better than earlier policies.  I like the "New Money"
    or "Universal Life" type policies that aim to make your policy "paid
    up" after say 15 years or so, so that you no longer need to pay further
    premiums.  These are often cheaper now than a term policy and the
    premiums are only subject to minor adjustment (if any).  I don't like
    to save through insurance per se.  Talk to a number of agents, and
    get illustrations and get them to compare their policies.  A good
    agent is willing to explain in simple terms, but clearly and fully
    without gafflebab.  Understand clearly what the benefits are when
    you die and what happens to dividends!
    
    It's a complicated area ... be prepeared but don't buy on the first
    meeting ... a good agent won't mind ... others get upset ... ignore
    them.
    
    Stuart
    

    re: .2
    
    DEC's term insurance may be a 1-year term, but you can find almost
    any length you want.  
    
    We each have 10-year renewable term insurance in an amount that
    would allow each of us, or our heirs, to pay off the mortgage or
    other debts.  I'd rather not go into details about it, but after
    discussing it with our insurance agent this was the best way to
    go.
    
    --bonnie

    With respect to varied Life Insurance policies, PLEASE check out
    Charles Given's book "Wealth Without Risk". He is highly accredited and
    respected by the Financial community. Even if you don't plan to get
    "wealthy", as the title may lead you to think,  we found this book to
    be TREMENDOUS in providing layman terms and **practical**
    information/hints on insurance. Like many people who've read this book, 
    we were shocked at how over-insured we were and the wrong type of policy 
    that we'd been talked into, and/or that our traditional "ignorant" beliefs
    led us to purchase! Correct information is essential in this area.
    
    Julia
                             

My wife and I (both DECies) are in the process of doing our wills.  In order
to specifically provide for Melissa (and future children), our lawyer suggested
that we leave all or a portion of our insurance benefits to our estates and
specify in the will that insurance benefits paid into the estate go to a trust
for children.  In this way, the trust is in the will where other moneys can
also go to it and the portion of the insurance is in the insurance policy
where it belongs.

Dick

Beware of making your estate a primary beneficiary of any insurance benefits.
It certainly allows the definition of a trust more clearly in a will, but
there are some pitfalls ...

1)  The insurance funds cannot be paid out until the will has been put through
probate.  If any of the intended beneficiaries will need cash to survive, e.g.
pay the mortgage, buy food etc, then your beneficiary may have a terrible
time surviving until the will has been put through probate.

2)  You MUST MUST MUST have a will to define how you want the funds dealt
with and the will MUST be without contention if the will is to go through
probate quickly.  If you have to divide money up, do it by percentages
rather than fixed amounts because if there is property that must be sold
the will may have to remain in probate until it is sold to determine
whether the terms of the will can be met.

3)  Ensure that your will is clear and without contention if you are 
requesting funds that your beneficiaries will need relatively quickly.
Family members and others contesting your will can extend probate for
years.

4)  Ensure that your will is up to date and accurate of your wishes.

5)  Ensure that you indicate where to find your will, otherwise it would
be the equivalent of dying intestate and probate in such cases again can
take years if relatives with any kind of claim to your estate keep
popping out of the woodwork!



So, I would recommend that you use named beneficiaries in policies you
intend to pay mortgage and immediate living expenses of your survivors.
Immediate living expenses for minors can be put to a named trust as a
beneficiary and the trust must be pre-defined.


Discuss this with your life insurance agent and your lawyer for the best
way to cope with this.

Stuart

    another thing you may want to watch, is that the insurance amound does
    not bump your estate to a quantity where your heirs will have to pay 
    estate taxes--that wuantity is $600K right now, but it adds up quick if
    you have two parents with large amount of insurance, a house, or
    whatever...
    
    Adrienne
      

I don't agree with naming the estate as beneficiary of your life insurance
instead of your children for the reasons mentioned in the previous reply
as well as the tax consequences.  Life insurance is usually a pretty hefty
sum, and will most probably put your estate over the limit for what can
be transferred tax free, so your estate will first have to pay taxes on
the insurance proceeds before passing them on to your children.  If you
make the children the beneficiary, the proceeds are not subject to tax
(life insurance benefits are normally not taxable).  And I believe that
the trustee you name in the will for the children's assets will also
be the trustee for the insurance proceeds, assuming the children are minors,
but I am trying to find that out for sure.

    I believe to name a trustee beneficiary, you must have declared the
    trust ... that is set up the terms of the trust ... with the trustee
    and then the beneficary is
    
    John Smith in trust for Mary Doe according to a Trust dated xx.xx.xx
    and lodged with John Q. Lawyer (Lawyer or other third party holding a
    copy of the trust document)
    
    I didn't mention taxes in relation to naming the estate as beneficiary
    because Canada does not have inheritance taxes, so I didn't think
    about it, since for me it isn't a concern.
    
    Stuart

    Oh, yeah, the trust document will lay out the terms of the trust and
    might include ...
    
    .  if the fund should pay lodging and maintenance to the guardian
       and controlling the amount
    
    .  if the fund should pay an allowance to the beneficiary and for what
       period
    
    .  if the fund should pay out the balance at a certain age
    
    .  how the fund should be invested (safety)
    
    
    There are probably a milliona dn one other things to include, but
    it will require the services of a lawyer most of the time to set
    it up correctly.
    
    Stuart

    RE: Taxes
    
    FWIW - In Massachusetts, life insurance benefits are taxable if the
           beneficiary is not the owner of the policy.
                                         
    	   My Dad passed away last June and my Mom is going to pay taxes
    	   on the life insurance she received. (My Dad owned the policy)
      
    
           According to my cousins,she works for Shaumut in the Trust 
           department, the best way to work the issue about leaving 
           insurance benefits for children is to set up a trust, this may
           have to be an irrevocable trust, and have the trust buy a life
           insurance policy on the parents. The 'Trust' then owns the policy
           so the benefit is then not taxable when paid out to the trust for
           the child benefit.  She's suppose to be getting more information
           regarding this for me, when I get it I'll try to post the info
           here.
    
    Kathy
    

    Our insurance is set up pretty much to deal with the problem in
    Stuart's .7, item 1 -- to provide cash flow while the estate's
    being settled.  Probate can take a long time, and in general
    nothing can be changed during the probate period without the
    permission of the court.  [Perhaps the executor can make
    investment decisions, such as renewing CDs that come due or
    depositing dividend checks, but I'm not sure of that.]  Surviving
    spouses have lost their house because there wasn't any cash
    available to pay the mortgage payments, even though there was
    plenty of money.  
    
    Since the money would be going to minor children, it would be
    managed on their behalf by an adult guardian -- our wills suggest
    people but I believe that has to be confirmed by the court.  We're
    in a family situation where we would trust any of our relatives to
    raise the kids well and use the money wisely, so we weren't too
    concerned about making the administration airtight.  
    
    Life insurance benefits are not subject to U.S. federal income
    taxes.  If they're paid into the estate they're subject to federal
    inheritance taxes.  Each state has different laws on these
    matters, so you need to consult with a lawyer who understands what
    your state's particular provisions are -- don't go to a Boston
    lawyer if you want to do something fancy in New Hampshire.  And
    make sure the lawyer is experienced in trusts, wills, or whatever
    else it is you want to do. 
    
    --bonnie

    re 0
    
    I read your last paragraph through a couple times to make sure I
    understood what you are asking - do you indeed have a life insurance
    policy for you at all?  It doesn't sound like it.....
    
    If instead, you are the primary beneficiary on your husband's
    policy.... you can add AJ as the contingent beneficiary - Personnel has
    the wording such that AJ gets everything if you're not around when your
    husband dies.
    
    What I wanted to caution you on was thinking that your husband's DEC
    life insurance provides a policy for you - it does not.  There is
    however, a dependent life insurance clause that he can opt for, that
    gives him a benefit in the event of yours or AJ's death.
    
    hope I didn't confuse things, but your discussion in 0 was a bit
    indirect.
    
    regards
    

    re the last, Yes I am covered under the dependant life insurance.  My
    husband is the beneficiary.  AJ is also covered under the dependant
    policy, husband is the benificiary as well.  My husband has the basic
    plus XX times his annual salary on himself, I am the beneficiary on
    that.
    
    To clarify my question, I want to know if under the dependant policy,
    can AJ be designated as benificiary of the dependant policy in the event 
    of MY death, or does is it required to be given to my husband?  Since
    AJ is a minor, and will be for many years yet to come, how would it
    have to be designated?
    
    As a question to one of the early replies, someone mentioned there must
    be a 30 day gap between the death of spouses, something about to
    ruleout accidental cause.  I was told that, say in the case of, a motor
    vehicle accident, it is simply determining who died last up to and 
    including minutes.  This would determine who's family (mine or his)
    would get the benefits of the estate in the case of no children and no
    will left.  Could you please clarify this?
    
    Lyn
    (who is very happy to be alive!)

Lyn,

I think it was my reply that mentioned the 30 days between deaths in the
event of death due to the same accident.  You can specify the beneficiary
provided that the beneficiary survives you by some amount of time (I have
10 days on my policy).  That allows for the instance where both people die
from the same accident, and means you don't depend on someone saying who
died last in the accident, by minutes as you put it.  The reason for that
is that if a husband and wife die in the same accident, but say the wife
dies 2 minutes after the husband, then the wife's estate would get the 
insurance proceeds assuming that she is the husband's beneficiary, and
the children wouldn't be able to get the money til the wife's estate was
probated.  That can be avoided by putting the condition that the wife would
have to survive the husband by 10 days otherwise the children become the
beneficiaries.  In my example, the kids would get the insurance proceeds
directly and would not have to wait for probate.  That would give them 
money to pay the bills, which is usually why you want the insurance to go
directly to the beneficiary and not to the estate.

Is that clearer?

Also, if you are only covered on your husband's dependenct life insurance
as provided by DEC, you might want to look at getting your own policy.  As
I recall, the dependent life insurance provides a very minimal amount of
insurance.  I found that I could buy term insurance much cheaper outside
of DEC and cancelled both my dependent life insurance and the XX times my
salary that I had carried through Digital in favor of our own separate 
policies. That also means that in case I end up getting caught in the
downsizing, I would still have life insurance.

Call me if you have more questions.  I've been doing a lot of updated reading
on insurance and estate planning recently to make sure we're covered now
that we've got the twins.

Regards,
Cathy

                      <<< Note 1285.15 by MCIS5::TRIPP >>>
                         -< we DO have dependant life >-
    
>    To clarify my question, I want to know if under the dependant policy,
>    can AJ be designated as benificiary of the dependant policy in the event 
>    of MY death, or does is it required to be given to my husband?  Since
>    AJ is a minor, and will be for many years yet to come, how would it
>    have to be designated?
    
    
    Lyn
       Based on things I have learned from my lawyer and others, AJ can
       be designated as beneficiary - since he's a minor tho', it is
       recommended that it be specified that it be designated to AJ
       UNDER the trusteeship of an adult; then you just have to remember
       to change that when AJ comes "of age" !!  I forget the exact wording
       the lawyer told me to use, but I could look it up at home if you're
       interested.

	Debbi J

    A word of caution, read your policy and understand exactly what your
    benefits will be upon your death.  My husband and I just sat down with
    a representative of PrimeAmerica (not a plug for them) and he pointed
    out that the Universal life policy we had in printing was not what was 
    we thought we had.  Another friend thought she would receive 20K
    a year after she reached age 65, but in reality it was a big fat ZERO.
    
    We're looking a term life insurance policies right now and I think I'll
    try to get a hold of the book mentioned in .5 "Wealth Without Risk".  
    I'm beginning to realize it's an ocean out there, and there are a lot
    of sharks in the water!!!
    
    Oh, the things we have to worry about when we have kids.  And my
    daughter is only 18 months old!!!  No wonder our parents are grey
    and don't know how to program the VCR!
    
    Jane