Life insurance help!!(10 Posts)
Ok so me and DH are just getting round to renewing our life insurance policies and things are a bit different than last time because we have DD.
So before we had it as everything gets left to the other however I'm unsure of this is how we should do it now. Do you leave a portion of it in your children's name? My main worry is that if DH was to meet someone else and have more children and he died that his assets would obviously be ultimately left to all his children and that makes me feel uncomfortable as I would want this money to go to DD.
What do other people do?!
single policies might be the thing for you. i'd ask about portioning some to dd from the company concerned. making wills might be an idea too, not a nice subject but get it out of the way whilst you are doing finances and have a child.
sorry meant to add, if he did go on to have another relationship and other dc is is only right that they should inherit too, so to cover all bases you should make provision then you know your dd will inherit and not half siblings to dd.
I think you can set up a trust for your daughter and leave some to her through that.
we have single policies and we have both agreed a sum for ds to inherit separately from what is left over which goes to each other.
Im currently battling between my 2 stepsisters who would sell my dad's soul if it meant one of them profiting so i never want ds to be in a similar position.
sorry meant to add the insurance company sets it up under a trust i think its called, if you give them a call they will be able to tell you and explain how to do it which is very simple. You just let them know the age they have to be in order to benefit and they do everything else.
How much are you insuring your life for? Is that, plus any other assets, really such a large amount that you would expect there to be money left for him to leave to DC at the end of his life?
Remember that being a lone, widowed parent (therefore caring for a grief-stricken child 100% of the time and making FT work very difficult) makes it very difficult to build up a large enough pension pot to make retirement comfortable.
Both of you should sit and do the maths. When my DH and I did we realised our top priority was to give the other as few money-worries as possible, should the worst happen, and we left everything to each other. He even took out an additional insurance policy because his work was higher paid than mine.
In our case unfortunately the worst did happen. He passed away in his late thirties, 2 years ago.
If my kids owned half our house or half the insurance money things would be a lot harder for me right now. It wouldn't give me the freedom to take time off work when they've not been able to attend school, amongst other things.
We trusted each other, though. If you don't trust your DH to do right by your kids then you'll feel differently. But if you do then sit and think about the financial ramifications of both options.
Oh and FWIW I'm engaged, but have already written a new will and set up a pre-nup to protect the money my DH left for my children if I also die young. If I live to a ripe old age I plan to help them through university and to buy houses, and then I'll need the rest on a comfortable retirement. There will be very little left for anyone to inherit if I have a typical life span for our generation, and that will increasingly be the case.
I won't got into why because it would out me to a few people but we have high policy payout amounts, think close to a million and separate payouts.
We have both agreed that around 150k would go untouched for DD to inherit later in life maybe for a house or something but I would still feel like if he had a house for say 350k mortgage free because of his money then I would want that property to be inherited by her, not by children that are not mine IYSWIM??
Somerville I'm so sorry that's dreadful!!
This is exactly how I feel, I don't want to put say 50% in her name because then he wouldn't have access to the money of something happened and that is ultimately what is important to me, if I die the least I can do is make sure they live and happy and comfortable life BUT I have seen how people can be influenced first hand and wouldn't want him to be talked in to using/splitting this money with other children that this money isn't intended for
Sounds like you need professional advice.
A life insurance policy can be written 'in trust' if you so choose - all you need to do is tell the company when you set up the policy. It means that some one (or more) else chooses who the money goes to in the event of your death. In practice you nominate someone you absolutely trust and let them know who you want the money to go to (but there is nothing to force them to follow your wishes). The advantage of doing this is that the money doesn't form part of your estate for inheritance tax purposes and the insurance company will pay out on receipt of the death certificate, not having to get probate and all the other stuff.
Some of what you're talking about though seems a lot more complex and would probably involve creating a 'proper' trust. In your will you can leave something for your child or children in something called a 'bereaved minor's trust'. This has some tax advantages for the children up to the age of 18, but after that it gets a lot more complex. If your executors / trustees are financially literate it is just about possible to do this with minimal professional help but a solicitor is a good idea and will need to be specified in your will. Any other kind of arrangement will need a real trust and that really does need an expert.
Just for the record, I'm not a lawyer or accountant, I've just been through the process myself.
Hope that helps.
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