Legal Question in Wills and Trusts in New Jersey
Distrabution of monies from a life insurance policy
I have a life insurance policy for $195,000 and my wife is the beneficiary, I want her to give $10,000 to each of my three kids and to my father. Can she give them the money without any taxes having to be paid by either party, or do I have to draw up a will stating my wishes in order to avoid any taxes? My life insurance policy won't let me break down the policy, it's share and share alike. Thank you
2 Answers from Attorneys
Re: Distrabution of monies from a life insurance policy
First, if you can still get life insurance at reasonble rates, why not get additional coverage for your children and father? Secondly, if additional insurance is not an option, you should have an estate and tax attorney prepare a Trust. You would then change the beneficiary of your life insurance policy to the Trust. Your wife could be the Trustee and you can have $10k go to each of your children and your father, with the remainder to your wife.
I hope this helps!
Ron Cappuccio
www.saveyourestate.com
Re: Distrabution of monies from a life insurance policy
THE POLICY BENEFICIARY DESIGNATION CONTROLS, SO ANY ARRANGEMENT WILL BE MORAL, NOT LEGAL. I AM SURPRISED THAT THE COMPANY WILL NOT ALLOW A SPLIT BENEFICIARY DESIGNATION. YOU SHOULD QUESTION THIS. ALSO, YOU DO NOT INDICATE THE SIZE OF YOUR ESTATE. YOU MIGHT WANT TO CONSIDER CREATING A LIVING TRUST AND HAVE THE POLICY OWNERSHIP AND BENEFICIARY DESIGNATION IRREVOCABLY ASSIGNED TO THE TRUST. AFTYER A 3-YEAR WAITING PERIOD, THE POLICY PROCEEDS WILL NO LONGER BE PART OF YOUR ESTATE, AND THE TRUST CAN ALLOCATE THE PROCEEDS ANY WAY YOU WISH. THIS IS A RESPONSE TO AN INTERNET QUESTION AND THE REPLY IS NOT INTENDED TO BE LEGAL ADVICE OR AS CREATING AN ATTORNEY-CLIENT RELATIONSHIP.
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