Author Topic: Wills and Life Insurance ?  (Read 3802 times)

Giro

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Wills and Life Insurance ?
« on: April 15, 2016, 10:51:12 AM »
Do you buy life insurance?

My husband and I met with an attorney this morning to draft our wills.  We had decided that basically everything goes to the other if only one of us does.  Everything gets split evenly among the kids if both of us die.  Fairly straight-forward, we thought.  The attorney advised us that because we have children from our previous marriages that they could get unintentionally disinherited if say I give everything to my spouse and his will doesn't leave anything to my children.  So, now we are contemplating what to do.  We both want to be fair and my husband is basically saying give everything to your kids if you do except "our" property and things.  He has plenty and doesn't need my life insurance or investments, etc. 

But what is fair?  I can designate my life insurance and investments by beneficiary.  I have a basic life insurance plan from work that pays a small amount upon my death.  Do I need an additional policy to ensure my children are taken care of?

What have others done with their will and assets? 


nereo

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Re: Wills and Life Insurance ?
« Reply #1 on: April 15, 2016, 11:38:08 AM »
Do you buy life insurance?
We have term life insurance, and we'll be dropping those as soon as we are FI. Since we both work our life insurance policies wouldn't "set us up for life" - but instead would pay for ~6 years of our total expenses.  Frankly at this point it's probably enough to push us very close to FI.

Yes, you should both have wills if you have children, as well as "living wills" detailing power of attorney and what your wishes are if you are incapacitated.
There is nothing wrong with leaving everything to your spouse if that's what you choose to do, but if you want to make sure that your children get something that should be stipulated in your will.  For example, suppose you pass away leaving everything to your spouse, then after a few years he remarries but dies a year later in an unfortunate accident.  All of your assets were transfered to him, which may now be transferred to his new spouse.  Would you be ok with that?


Giro

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Re: Wills and Life Insurance ?
« Reply #2 on: April 15, 2016, 11:57:38 AM »
We are FI and I really wasn't planning to buy life insurance at all, just the free work insurance.  I am thinking that I will just add them as my beneficiaries to some of my investment accounts. 

nereo

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Re: Wills and Life Insurance ?
« Reply #3 on: April 15, 2016, 12:46:24 PM »
We are FI and I really wasn't planning to buy life insurance at all, just the free work insurance.  I am thinking that I will just add them as my beneficiaries to some of my investment accounts.
IMO, if you are FI then you have no need for life insurance - your assets will help your children get to adulthood.  Adding your children as your beneficiaries is one solution, though if they are minors the money might have to go into a custodial account.  I'd check on that.

A living will is important - don't forget that.

Giro

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Re: Wills and Life Insurance ?
« Reply #4 on: April 15, 2016, 01:14:02 PM »
The attorney is setting up the general POA, the living will, the health care POA and the custodial account for the one minor child.  The other children are all adults. 

I was more concerned about leaving everything to the spouse and then nothing going to the children. I was even concerned for my husband.  I'm FI, he should leave everything to his child.  I'm good, I don't need anything.

But, the attorney suggested changing the beneficiaries on life insurance and then leaving the other assets to each other.  The homes, the bank accounts, the autos, etc.

I just thought my piddly little policy wouldn't give them much.  I can leave them my investment accounts but then that's a great deal more then the other assets. 

I'm sure I'll live another 50 years anyway so all of this stress is over nothing.  :)


MrsDinero

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Re: Wills and Life Insurance ?
« Reply #5 on: April 15, 2016, 01:48:06 PM »
If you want to ensure all the kids get a little something, while the majority goes to your spouse. You can always create your will so the kids will get a designated amount, but is held in a trust until they reach a certain age. 

pdxvandal

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Re: Wills and Life Insurance ?
« Reply #6 on: April 15, 2016, 01:53:15 PM »
Don't forget about Social Security survivorship benefits for your spouse and child, if you croak.

I canceled my term policy last year (which I had for 8 years), as I've got a 70k policy through work, Social Security and enough investments to ensure my small family will be fine. If I had more than one kid, I'd reconsider life insurance.

AlwaysLearningToSave

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Re: Wills and Life Insurance ?
« Reply #7 on: April 15, 2016, 02:05:58 PM »
Ask your attorney about whether a trust would be appropriate for you.  A trust could be structured so that the surviving spouse benefits from the property during his/her lifetime and then the trust property is distributed to children upon the surviving spouse's death.  A common arrangement is for the trust to provide for mandatory distributions of income to the surviving spouse for life, discretionary distributions of principal to the surviving spouse for life, and then distribution of the remaining trust principal to children upon reaching a certain age. 

A trust could be the best way to ensure your spouse is taken care of while ensuring your children are the ultimate beneficiaries of your wealth.  Your attorney should be able to discuss it in relation to your specific circumstances and help you choose the best option.  If not, find a different attorney who regularly works with high net worth clients. 

Fishindude

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Re: Wills and Life Insurance ?
« Reply #8 on: April 15, 2016, 02:15:59 PM »
I'm not a fan of life insurance in most instances.
My partners and I have some in the business.  It is enough to pay our spouse the value of our stock, so that the remaining partners or business is not burdoned by the death of one of us.   I've also got a small policy that came with health insurance, basically enough to get me buried.

I look at my net worth as being my insurance for spouse and kids.
Sounds like you just need to rethink the terms of your will and get it adjusted to suit you.

Catbert

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Re: Wills and Life Insurance ?
« Reply #9 on: April 15, 2016, 04:21:37 PM »
Are your children grown?  Both my situations all involved grown children which is a much different situation if you have minor children or those in college.

My first husband (DH1) was significantly older than me and had grown children when we married.  When he died he left everything to me and I gave token amounts (5K each IIRC) to his children..  20+ years later the inherited IRAs have grown tremendously.  I'm taking distributions each year from the inherited IRA, paying taxes and dividing the remainder among his children.  The beneficiary on those IRAs are now my step-children from that marriage.  Other assets (house, rentals, my IRAs, etc) go to my current husband even if they originated in my first marriage.

I've now been married for 20 years to DH2.  When we married I had substantially more assets than DH2.  His IRAs and smallish brokerage account have his children from his first marriage as beneficiaries.  Other joint assets (house, cars, rentals etc.) go to me.  As noted above the inherited IRAs go to my step children from 1st marriage.  My IRA, large-ish brokerage account, pension etc, go to DH2. Alternate beneficiaries are my siblings.