What Impact Do Beneficiary Designations on My Life Insurance Policies, Annuities and Retirement Accounts Have on My Estate Plan?

A Video FAQ with Mary E. Vandenack

Beneficiary designations pass assets such as life insurance and retirement accounts directly to your beneficiaries. That allows them to bypass the probate process and get directly in their hands. One of the things you do want to look at is the tax implications of any type of beneficiary designation. An IRA, for instance, will be taxable income to the recipient of the IRA proceeds so you are going to want to make sure you structure that beneficiary designation in a way that minimizes that impact.

© 2014 Parsonage Vandenack Williams LLC

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Marriage of Hall: Can Your Ex Maintain a Life Insurance Policy on You Without Your Agreement?

The Kansas Supreme Court, in Marriage of Hall, was asked to consider whether an ex-wife could maintain a life insurance policy on her ex-husband’s life.  The ex’s proposed plan entailed the ex-wife paying all the premiums on the policy.  The ex-wife’s stated reason for wanting to maintain the policy was that her ex-husband provided most of the support for their minor child, and that she had an insurable interest in her ex-husband because she would need his support to take care of their child.  The ex-husband objected due to the possibility that he could be negatively affected by the insurance because that policy’s existence would limit the amount of insurance he could otherwise obtain.

The court held that the order to maintain the life insurance was unenforceable.  In doing so, the court acknowledged what the ex-husband referred to as “an absolute statutory right to terminate any insurance policy on his life.”  The court indicated that, when the insured requested that the insurer terminate the insurance applicable to his life, there was no longer an insurable interest that the party paying for the insurance had.  Although this was a Kansas case, the court cited Nebraska law which had addressed this matter in a similar Nebraska case in 2008.

© 2012 Parsonage Vandenack Williams LLC

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