Insurance proceeds are non-taxable funds no matter how the premiums are paid. In Michigan, insurance proceeds received by a spouse,and only a spouse, are also excluded from household income for the Michigan Homestead Property Tax Credit.
With life insurance, it does not matter if there is or is not a will, because life insurance proceeds are paid directly to the named beneficiary and not to the estate. The named beneficiary obtains a certified death certificate and submits it to the insurance company with the appropriate application form provided by the insurance company. The estate has no rights to the proceeds and would not even be paid to the estate. The only way the estate would be involved is if all named beneficiaries had predeceased the decedent or if the policy names the estate as the beneficiary. In that case, one of the heirs as defined in that state's laws would apply to be the administrator (if there is no will) or executor (if there is a will) and receive the proceeds.
If there is no living beneficiary when the insured dies then payment of proceeds from a life insurance policy would be paid to the estate of the insured. If the insured had a will then the will provides who receives payment of estate assets. If no will is present then state law will provide how and to whom the assets are paid to. If the estate is very large then estate tax could be due on some of the proceeds of the life insurance policy because they become assets of the estate.
You may need to be appointed the fiduciary of his estate because the proceeds will be paid to the estate. You should contact the insurance company for their policy regarding a situation such as yours.
In most cases, the beneficiary has no specific responsibility to do something with a life insurance payout. However, you should be careful to retain a portion of it to cover taxes that might result because of the income. Additionally, if the recipient of the proceeds gets it on behalf of another person (for example, a parent on behalf of a child), the recipient has a fiduciary duty to hold/use the funds in trust and for the best interests of the intended beneficiary.
In almost all cases (the exceptions being things involving life insurance as part of executive savings and compensation plans, and other specialized things)...LIFE INSURANCE proceeds are not taxable to the beneficiary. The IRS agent is wrong. Dispute it. It's a basic thing, and he'll be corrected quickly.Now understand, (a common error made by many), if the beneficiary was the estate of the deceased - the person themselves - (which generally doesn't have much tax considerations anyway, and you got it through the estate....then YOU weren't the beneficiary of the insurance. By the same token, you weren't paid insurance proceeds, but an inheritance..and that probably isn't entirely taxable at least.Below from the IRS own guidelines:4.9 Interest/Dividends/Other Types of Income: Life Insurance & Disability Insurance Proceeds Are proceeds paid under a life insurance contract taxable and do they have to be reported as income? Generally, if you receive the proceeds under a life insurance contract because of the death of the insured person the benefits are not taxable income and do not have to be reported. Any interest you receive would be taxable and would need to be reported just like any other interest received. However, if the policy was transferred to you for valuable consideration, the exclusion for the proceeds is limited to the sum of the consideration you paid, additional premiums you paid, and certain other amounts. There are some exceptions to this rule.
Death benefits are generally not subject to attachment for creditor debt. States establish laws concerning property that is exempted from creditor seizure. Without knowing the state of residency it is not possible to be more specific. You can find out what property is exempt under the laws of the state where the person lives by searching "asset exemptions". (Example: Florida asset exemptions). In many states the proceeds of life insurance are not part of the estate because they are proceeds of a contract to pay a third-party beneficiary, which promise of payment vests upon the death of the insured, so the insured (and the estate) do not receive any benefit. Since the estate has no beneficial interest in the proceeds of the insurance, the creditors would have no claim for this money (unless, perhaps, a surviving community property spouse is the beneficiary).
The insured can never amend his insurance policy without the consent of his irrevocable beneficiary because this act would lessen or diminish what is due to the irrevocable beneficiary and thus considering that this is a diminution...consent of the IR beneficiary is necessary.
If the beneficiary of a policy has died, the estate of the beneficiary can still collect the insurance payment, assuming that the beneficiary does have an heir or heirs of some kind (as most people do). Note that this is a fairly unusual situation, because normally when a beneficiary dies, a new beneficiary is named. There is no reason to allow the policy to have no living beneficiary, unless the insured and the beneficiary happen to die at about the same time, and there is no time to name a new beneficiary.
No. The only person that can have that money is the beneficiary on the account. And then whatever is stated in the will. All the POA does is allows the POA to sign on your behalf if your not present or unable to do it because of your health.
This will depend on whether the estate is solvent or insolvent. In a solvent estate, when a specifically devised asset is sold, the proceeds of the sale go to the named beneficiary. This assumes that the beneficiary consents to the sale of the asset, because a specifically devised asset must be given to that beneficiary unless that beneficiary consents. An executor who sells such an asset without consent could be sued for damages. In an insolvent estate, if specifically devised property is sold because there is not enough cash in the estate to pay all debts, then some or all of the proceeds of sale will go into the estate to pay those debts, with any remaining amount, if any, going to the named beneficiary.
No, you have no entitlement to the money. Because a life insurance policy is a contract the only legitimate way to change a beneficiary is by amending the contract. This could have been easily done by her obtaining a "Change of beneficiary" form and assigning you as the primary beneficiary. Where that did not happen, you have no right to any of the life insurance money regardless of what the will says.A Different PerspectiveYou should consult with an attorney if there is any considerable amount of money involved. You may be able to bring a suit in a court of equity. If the decedent died without naming a beneficiary you may be able to reach the proceeds using the divorce settlement agreement as evidence. An attorney could review the situation and explain your options, if any.
Generally, no. However, the fact that you are in jail does not excuse making the premium payments on the policy. Therefore, the policy may lapse (terminate) for non-payment of premium if payments are not made. Jail may enter the picture in another way. If the person who goes to jail is the beneficiary on the policy, and the incarceration is because the beneficiary killed the insured, the beneficiary will not be able to collect the life insurance proceeds. A person such as he/she will not be permitted to benefit from the wrongful act of killing the insured.
In general he can. The fact that they are married does not, in itself, prevent the transaction. The agent can also be named as the beneficiary. The spouse has an "insurable interest" in the life of the other spouse due to "love and affection". It is important, though, that the insured spouse change the beneficiary in the event of divorce, unless he/she wishes the ex to nonetheless get the proceeds. This is because in general, an insurable interest must exist only at the inception of the policy.
Who can you insure for life insurance? can you obtain a life insurance policy on some one other than your spouse or child? Yes.You can obtain life insurance on anyone with whom you have an insurable interest.Each person has an insurable interest in his or her own life, and therefore can select anyone as a beneficiary.1. Parent and child, husband and wife, brother and sister have an insurable interest in each other because of blood or marriage.2. Creditor - debtor relationships give rise to an insurable interest. The creditor can be the beneficiary for the amount of an outstanding loan.3. Business relationships give rise to an insurable interest. An employee may insure the life of an employer, and an employer may insure the life of an employee.
Eventually an employer would have to. because unless there is insurance that protects the employees wages, the employer can not be held responsible for the employees ability to work. and if the employee does not work then he does not earn a wage.
No, true Group insurance cannot deny enrollment for health reasons.
Individual disability insurance benefits are not taxable, because the premiums are paid with after-tax money. The employer paid disability insurance policies have taxable benefits due to the fact that premiums are paid by the employer with pre-tax money.
His life insurance policies should not be made payable to his estate. They should not pass by will because the proceeds may become subject to estate taxes. If there are multiple policies they each should have a named beneficiary. Your husband should seek the advice of a professional insurance advisor who can explain and discuss his options and how the policies should be titled.
My employer requires that my husband participate in his company's health insurance or they will drop him from their insurance. Insurance is a choice offered as a benefit by the employer because the employer is paying a portion of the cost to be insured. You do not have to participate if you don't want to. Also, the question being answered is that can an employer force an employee's spouse to take coverage offered elsewhere: NO. If a company offers a family health plan, they CANNOT specify that a spouse take other insurance if available. They CAN require that if you are declining coverage from them (your own employer), that you show you have coverage elsewhere.
Yes. It may be a hassle, but it is important to choose the best coverage at the least cost for your family.
There is no single answer to your question because the facts may be different in different cases. First, the insured should change the beneficiary designation if a named beneficiary dies before the insured's death. That will avoid problems later.A beneficiary designation may include additional instructions when two or more beneficiaries are named. First, the insured can name "contingent" beneficiaries who will take a deceased beneficiaries share- on any life insurance policy. Second, the beneficiaries may be named as beneficiaries "per stirpes" or as "joint with the right of survivorship" where if one dies their share passes to the survivor.You need to check the designations on the particular insurance policy, the policies of the particular insurance company and the laws in your jurisdiction.
An individual buys life insurance for a variety of reasons, some of which may include Love, Character (to provide financial security for others), or because of a court order (such as for divorce) requires it. There are other reasons, too. Unless the beneficiary of the life insurance policy has agreed to answer for the debts of the deceased, he/she is not ordinarily responsible for them. The Statute of Frauds of the US jurisdiction in which he/she/the deceased resides will probably address this issue. Under the Statute of Frauds, an agreement to pay the debt of another usually has to be in writing to be enforceable. If the beneficiary of the life insurance policy is also the executor/administrator of the estate, he/she has to follow the statutory law regarding notice to creditors (usually by publication) of the insured's death, and see to it that claims timely filed are paid from available estate assets. If the life insurance proceeds are payable to the estate, those proceeds would generally become an estate asset. However, as your question is stated, the named beneficiary is someone other than the estate. Therefore, based on the scope of the question, the beneficiary is entitled to the funds and is not responsible for the debts of the deceased. Regardless of one's view on the moral or ethical issues of the matter, the beneficiary has no legal obligation to use the funds to pay the debts of the deceased. This is a general response to your question and is based only on the information given. No attorney-client relationship is created or intended.
To get to the route of what your asking: The amount of the LOSS that is deductible is the unrecovered loss. Hence if you have claimed the entire loss as a deduction the amount of insurance you get is income - because essentially, you overdeducted the loss. If you have made no loss deduction claim, then u=insurance is NOT taxable as it is onlyr returning you to the position you were in before the loss.
The death benefit on a life insurance policy is not taxable for federal income tax purposes. However, the death benefit becomes included in the estate calculations of the deceased. So, depending on the estate tax laws in affect at the time of death, there may be estate taxes on the death benefit proceeds of the life insurance policy (but not income taxes). Here's an example. If you are the beneficiary of a death benefit of $500k from your parent and your parent has no other assets, then there would likely be no taxes on the proceeds. If you are the beneficiary of a death benefit of $500k from your parent and your parent has more assets than the Federal estate tax exclusions in effect at time of death, then perhaps the $500k will have estate taxes due as part of the estate. This is because the addition of the policy proceeds to whatever else comprosed the estate may take the estate value over the limit such that taxes will be payable on it. This was a simple example, and there are certainly many other possibilities and scenarios.
You should see a lawyer for this because it isn't likely if you were lucky enough to know where the Insurance Co., was, that they would give out this private information. Your lawyer can find out about this for you. Marcy