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Estate Question

cbxjeffcbxjeff Member Posts: 17,637 ✭✭✭✭
edited September 2012 in General Discussion
A friend wants me to be the benificuary of his life insurance as well as his 401K in the event of his death. He feels that his wife is not responsible enough to handle the money. Since we frequently travel together, my question is: What would happen to the funds if we were to die together? Would the funds go to my estate or his?

Thanks guys,
It's too late for me, save yourself.
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Comments

  • Marc1301Marc1301 Member Posts: 31,895 ✭✭✭
    edited November -1
    If you are the only beneficiary on the policy, it would go through probate under your circumstances I believe.

    Have him pick a secondary if he's that worried about it.
    Will save a lot of money from going to attorneys.

    How about your wife since he trusts you so much?
    "Beam me up Scotty, there's no intelligent life down here." - William Shatner
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  • Mr. PerfectMr. Perfect Member, Moderator Posts: 66,437 ******
    edited November -1
    It's going to be a real legal battle upon his death even if he properly names you. In most stated it will require his wife to sign an oath that says she is aware that she is not the beneficiary, and those are troublesome down the line anyway.
    Some will die in hot pursuit
    And fiery auto crashes
    Some will die in hot pursuit
    While sifting through my ashes
    Some will fall in love with life
    And drink it from a fountain
    That is pouring like an avalanche
    Coming down the mountain
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  • Marc1301Marc1301 Member Posts: 31,895 ✭✭✭
    edited November -1
    quote:Originally posted by Mr. Perfect
    It's going to be a real legal battle upon his death even if he properly names you. In most stated it will require his wife to sign an oath that says she is aware that she is not the beneficiary, and those are troublesome down the line anyway.

    I was addressing his direct question, but you are certainly correct.

    Even if you write a will, and purposely include a statement that you are leaving your wife out, I have heard they will collect between 33% to 50% regardless if still married at the time of death.
    "Beam me up Scotty, there's no intelligent life down here." - William Shatner
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  • CDMeadCDMead Member Posts: 2,141 ✭✭
    edited November -1
    In my experience the spouse has to sign off before a life insurance policy can have a different beneficiary.

    No. No trouble in this scenario at all.
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  • spasmcreekspasmcreek Member Posts: 37,717 ✭✭✭
    edited November -1
    how about being named a trustee...i have found out the hard way one can do anything they want...or simply disappear items before death....
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  • timinpatiminpa Member Posts: 2,250 ✭✭✭✭✭
    edited November -1
    if you both die, who cares where the money ends up really?[:D]
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  • bigoutsidebigoutside Member Posts: 19,443 ✭
    edited November -1
    The 401k will go to her without her expressed consent for it to go elsewhere.
    If there are kids, they may have a claim depending on how he structures the beneficiary designations. Nothing for you though if she doesn't ok it.

    He can name you beneficiary of the life insurance. And oddly, she would have to pay any estate taxes due on your distribution. It's a common way to provide a final Ef you to a former loved one. Either intentionally or by accident.

    There will be a clause in the actual policy that describes exactly the situation you describe. There will be a presumption of who deceased first in a common accident. And they can frequently go back a week or more in case one of you "lingers".

    Have to look at the contract to say with any certainty.
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  • bigoutsidebigoutside Member Posts: 19,443 ✭
    edited November -1
    quote:Originally posted by hobo9650
    State laws vary. He needs to talk to an Atty.


    Erisa laws are federal. Indiana isn't a community property state. What did I miss?
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  • COBmmcmssCOBmmcmss Member Posts: 1,174 ✭✭✭✭✭
    edited November -1
    Your question was what if you die together.

    That is a typical quandary discussed in every law school probate class across the nation.

    If you did die together, who died first ? If you then there was no beneficiary. The money stays with his estate.

    If him, then you were the beneficiary and the money stays with your estate.

    Some states deal with this differently due to the toss up question of "who WAS on first". (Sorry I couldn't pass up the Abbot and Costello reference.)

    So two things you may want to review, 1) the state you reside in and 2) the states you may pass through, if the accident were to happen. They may deal with it differently.

    The alternative is to have a clause specifying if it were to happen simultaneously, then the money goes to.......

    Just a bit of thought-provoking ramblings for you.

    COB
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  • darkwaterdarkwater Member Posts: 99 ✭✭
    edited November -1
    From an income tax perspective, it is usually better to have the spouse be the beneficiary of the 401k as she will have more options to minimize the tax impact. If you are the 401k beneficiary, you would be paying the tax on the distributions, and you could be at a higher tax rate than the spouse after the husband is gone.
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  • cbxjeffcbxjeff Member Posts: 17,637 ✭✭✭✭
    edited November -1
    Thanks for all the replies guys. Nothing is easy for Jeff anymore! Would a simple will supersede any insurance or 401K designated benificuaries?
    It's too late for me, save yourself.
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  • COBmmcmssCOBmmcmss Member Posts: 1,174 ✭✭✭✭✭
    edited November -1
    quote:Originally posted by cbxjeff
    Would a simple will supersede any insurance or 401K designated benificuaries?


    Simple answer - No.

    COB
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  • cbxjeffcbxjeff Member Posts: 17,637 ✭✭✭✭
    edited November -1
    Jeff does simple best COB. I need to talk to him again. I believe he had his job, about 20 years ago, before he was married. Given that, unless he modified his benificuary elections, his wife may not be an issue. As I said, nothing is easy.
    It's too late for me, save yourself.
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  • KEVD18KEVD18 Member Posts: 15,037
    edited November -1
    Stay out of it. You'll wind up in court over this. I can virtually guarantee it. They you'll personally go broke trying to help him out(posthumously).

    He needs to speak to an estate lawyer to set up a trust whereby the wife is set up with an allowance funded from the policy an the 401k.

    Again, don't get involved. It will only mean trouble for you down the road
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  • Locust ForkLocust Fork Member Posts: 32,077 ✭✭✭✭
    edited November -1
    I wouldn't be the beneficiary of anyone's estate for ANY REASON WHATSOEVER!!! (Not anyone that has family that would depend and expect to be the beneficiary anyway.)

    That is just a HORRIBLE position to be put in. If his spouse needs a babysitter he shouldn't be married to her....and you REALLY don't want the responsibility of dealing with it. I can't imagine the nightmare that would be.
    LOCUST FORK CURRENT AUCTIONS: https://www.gunbroker.com/All/search?Sort=13&IncludeSellers=618902&PageSize=48 Listings added every Thursday! We do consignments, contact us at mckaygunsales@gmail.com
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  • slumlord44slumlord44 Member Posts: 3,702 ✭✭✭
    edited November -1
    A good estate lawyer is a must for what your friend wants to do. As has been said, leaving it to you is a bad idea in many ways. I he feels she is not able to manage the money, a trust with you as trustee and an alternate if you die together may work. Had an attorney try to have me set up my local bank as trustee over my estate. My wife immediately walked out the door with me and we found another lawyer.
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  • bigoutsidebigoutside Member Posts: 19,443 ✭
    edited November -1
    Jeff. What is his intent?

    Is he trying to leave his wife with nothing? Or trying to have you monitor a periodic distribution to her as a spendthrift control? Or leave everything to you and only support her if you pass first?
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  • cbxjeffcbxjeff Member Posts: 17,637 ✭✭✭✭
    edited November -1
    Big, the intent is to have someone other than his wife handle the funds to support her and the child. No, it's not to leave everything to me, it's about the distributation of funds over time. His concern is what would happen if we both were pass together in a blaze of gunfire.
    It's too late for me, save yourself.
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  • bigoutsidebigoutside Member Posts: 19,443 ✭
    edited November -1
    Gotcha.

    Have him send me an email. I'll get him in touch with appropriate resources. If he needs a trust, he'll know the proper questions to ask the attny.
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