Author Topic: DH named owner of father's Whole Life policy  (Read 2172 times)

Dwizzle

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DH named owner of father's Whole Life policy
« on: September 13, 2016, 07:07:40 PM »
Help!? My FIL named my husband and DH's bro as owners of the whole life policy, of which FIL is the insured and his two sons are the beneficiaries, WITHOUT discussing this with my husband ahead of time. Not sure how to manage the situation or what the implications are... And why is the ins co asking my husband for his taxpayer ID #? What should/can we do?

Some details:
Total death benefit: $22,331
Total loan (s) including interest: $9,020
Net death benefit: $13,311

I believe the premium is fully paid, for life. I would love to just completely ignore the whole thing, but it seems like we have some housekeeping to do. Any input is appreciated!

boarder42

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Re: DH named owner of father's Whole Life policy
« Reply #1 on: September 13, 2016, 07:24:05 PM »
I don't know alot about this but it's income so that's prob why they need your taxpayer ID why are you freaking out ?  You could probably do a quick Google search and find the answer. You have all of 4 posts here.

Dwizzle

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Re: DH named owner of father's Whole Life policy
« Reply #2 on: September 13, 2016, 08:05:54 PM »
First of all, not sure why you're calling me out about limited posting activity; FWIW, I have spent a lot of time on these forums (long enough to understand the often-justified judgment and ire toward new members). I just usually don't have anything to add that someone hasn't already said better, and when I do have questions I can usually find answers in a previous post or by a Google search. However, in this case I have not been able to easily find what I'm looking for (lots of sales-y content), and yes we tried calling the insurance company too. I was hoping someone here could help me understand, or point me in the right direction to investigate further on my own.

I am "freaking out" because I know just enough to know that there may be implications I am completely unaware of that could complicate things down the road.

For example:
Does this count as a gift from FIL, and what does he need to do to document that?

How might this affect his future Medicare eligibilty? (He is 63.)

If it is considered income, is it income now or when the benefit is paid? (We are already in a higher than usual tax bracket this year and have enough tax planning strategies to sort out.)

What impact does the existing loan have?

Kakashi

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Re: DH named owner of father's Whole Life policy
« Reply #3 on: September 13, 2016, 08:20:08 PM »
Yea I don't see boarder42's reason to call out you only have 4 posts.  Perhaps he's been here long enough that he feels this is an exclusive club.  Either that or he thinks you are a troll post.

Anyways, getting your DH's SS# is pretty standard practice as he will receive the death benefit upon FIL's death.  Whether not it's taxed our not depends on a number of factors, but the insurance company has nothing to do with that.  It's determined during tax time.  USUALLY it's not taxable income and is considered a gift. 

On your other questions, you would have to get the insurance contract and look in there.

SwordGuy

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Re: DH named owner of father's Whole Life policy
« Reply #4 on: September 13, 2016, 10:34:31 PM »
You could, of course, delay payment until next year by waiting to file the papers with the insurance company until next year. :)

They will need your taxpayer id to report the income to the US government (assuming you are in the USA).  Other countries may have different rules.


chasesfish

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Re: DH named owner of father's Whole Life policy
« Reply #5 on: September 14, 2016, 06:01:13 AM »
This is probably a non-event for you and your husband.   I would just clarify what is going on with the loan (is the FIL making monthly payments, is the interest just accruing against the earnings, ect) and confirm that there's no monthly liability to you.

I would plan on using the proceeds to pay for funeral expenses in the distant future and move on.  My guess is if he's in the US, he's transferring assets within the gift limits to plan for medicare/long-term care.

Dicey

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Re: DH named owner of father's Whole Life policy
« Reply #6 on: September 14, 2016, 09:45:47 AM »
He is 63? You need to seriously chill  Forget about it completely. It's your FIL's business and not yours to second guess. By the time that policy pays off, you should be FIRE anyway, so it will not matter.

I'm sorry b42 was rude to you. If it's any consolation, s/he has been so to me more than once, and I have more posts than s/he. This person seems to skitter along the periphery of what the mods allow. Someday, they will slip and be gone, as this is a remarkably civilized oasis on the internet frontier. Welcome!