The Great Life Insurance/Will Making Debate!!
So, this could seem complicated so I apologize! My husband and I are working on having a child currently. He also has an 8 (almost 9) year old girl. We have recently met with a lawyer and got the will making process underway. We also have met with an insurance agent to get life insurance underway. Last night we had a very long heated debate about how our life insurance's would be distributed in the case of one/both of our deaths. Here are the scenarios:
Before we have a child:
1. I die first-DH gets life insurance $ from me and then upon his death whatever is left would go to SD-am i wrong for having an issue with this?
2. We die at the same time-My dad gets my Life insurance and SD gets DH's life insurance via a trust.
3. DH dies first-I get life insurance $ and upon my death our estate goes into trust for SD-again, have an issue.
After we have a child:
1. I die first-DH gets life insurance $ from me and then upon his death everything is split 50/50 between SD and our child-HAVE A HUGE ISSUE WITH THIS!!
2. We die at the same time-We have trusts set up for each child and our child gets 60% for it's care (is going to be ten years younger at least) and SD gets 40% for her care.
3. DH dies first-I divide everything in thirds, with our child getting 2/3 and SD getting 1/3 (See explanation below)
I think that it makes absolutely no sense to set up our life insurance and will as if SD and our child are both biologically ours. SD is not and thankfully will not EVER be my daughter. That has been made conveniently clear to me from day 1 since meeting DH, so everyone did such a great job reminding me that now when it's convenient for them I WONT FORGET! The way that I see it we will be our child's ONLY family, however SD still has an entire second half to her family that she will be receiving funds from upon her mothers death. So therefore, I'm not going to settle for shortchanging our child so that monetarily it looks "equal" when we die. If we die at the same time, we won't have an issue, because we have agreed on a 40/60 split since our child is going to be ten years younger than SD and will need to be cared for (assuming they're under 18 when we die). However, if i die first, DH gets my life insurance and then it is split in half between SD and bio child when he dies. This is the scenario I have an issue with. The difference between the two outcomes is going to be about $125K for our child. That's a lot of $, especially considering that SD is beneficiary on her mothers estate and will be making out like a bandit on that end too. Basically with that set up SD is going to benefit from my death, moms death and dads death, whereas our child will only be benefitting from mine and DH's death. It's not fair and I'm wondering how other families have set up this type of thing given similar situation??
I think I have such a huge
I think I have such a huge issue with it because from Day #1 it has been made abundantly clear to me that I am NOT her mother, which is fine, however why should she benefit from my death since I'm not? My in-laws are very wealthy and she will inherit a lot of $ upon their death. Her other grandparents are not hurting for $ either, and neither is her mother or my DH, however my Dad is. I have an issue with a pampered princess who def is not my child benefiting from my death when my dad can barely pay his bills.
As far as the new wife, doubt it, but I'd rather DH take my $ and use it to make himself happy with a new spouse than to have it spent on SD.
Everything that you just said
Everything that you just said I don't disagree with, however maybe I'll need to reevaluate DH getting my entire policy if that is the case. Just saying it's out of my control is contradicts why we get a will made in the first place. I completely understand DH's desire to leave $ to SD, however I don't have any children at this point, leaving it to his child is not my problem.
That's great that you guys decided the $ should be for your dad to enjoy, I wish that I had confidence that my SD would do the same. If she were in your shoes she would take every cent she could get, I'm sure of it. And BM would do everything in her power to get her greedy mits on it through SD.
In an ideal world, each of
In an ideal world, each of our life insurances would go to/be split among each of our biological children, however if i die first, my insurance will become part of his estate, which would then be split with SD, therefore shortchanging our biological child. It's quite complicated. We both are dependent on each others income to afford the lifestyle that we have. I would be fine with DH using my insurance to pay off our house for he and SD to live in, but would not be okay with him using it to buy her a car or pay for her college, or gifting her with things from it.
Actually when you take out a
Actually when you take out a life insurance policy you can name whoever you want as the beneficiary. As a matter of fact it doesn't even have to be a person, it can be a trust that has been set up by our lawyer, and thats straight out of our lawyers mouth. I could make my dog the beneficiary if i chose as long as i put a trustee in charge of distributing it as i see fit.
This issue really has two separate phases. The first being up until our child is age 18, the second being after age 18. Before age 18 our child is clearly going to need more $ sent to their trust considering that they will be 10 years younger and have 10 more years worth of expenses that need to be paid for without a second parent.
The second phase is after our child would become age 18 and considered financially independent. At that point, I think that DH's estate should be split equally among his biological children, and the same with me (but SD is NOT my child). My entire point is that kids who are not biologically mine should not be benefiting from my death. After your input I'm pretty sure I'll just make my child's trust the beneficiary of my Life insurance and then not have to worry about it. DH can make the beneficiary of his policies the trusts for SD/our child and then we can assign each other as trustee. That way, the money is accessible to care for the kids incase of one of our deaths but it won't be squandered on a kid that isn't mine!
Allow me to copy/paste my
Allow me to copy/paste my previous blog about this to show you that you are NOT alone in these feelings! I share them too. Also, if you would like to click on my name, you can see my blog with the replies. Some are positive and supportive...some not so much.
I would NEVER feel that DS14 was entitled to ANYTHING dh had worked for throughout his life. Why do some think we are crappy for also not feeling our skids or BMs are entitled to what WE have worked for throughout our lives as well?
I will have to read your backstory, but you might want to look into setting up trusts etc for your bio and not worrying with giving your DH such a big portion. You might try looking into giving him enough to pay off a big bill like a mortgage or something...
Blog for
Blog for replies:
http://www.steptalk.org/node/222446
I have a chronic illness. I am only 38. I have talked about this before, but it is always on my mind. What is your "after death split" plan?
I posted this on an older blog, but i figure it won't get seen much.
Here is my fear--
I make probably 20,000 a year more than DH. I don't work my ass off so that DH can call claim to MY money. I pay more than half the household bills already. No, my money is MY money. And when I am dead and gone, you can rest assured there are legal documents ready to also assure that DH only gets enough to pay half of whatever is left on the mortgage. The rest goes in a trust for my DS14 (or either to him directly if he is old enough). There is NO way that DH is benefiting after my death from my hard work, except to pay off our mortgage, because if DH benefits, then eventually that trickles down to SS11 and then BM. Nope. Only my bio DS14 is allowed to benefit from my hard work every day of my life.
Thankfully my DH agreed to it
Thankfully my DH agreed to it all. There wasn't even a fight. I know OPs DH is offended. Sometimes they just can't see past the Oxycontin.
My wife and I each have two
My wife and I each have two kids from our past marriage. She dies, I get everything, I die, she gets everything. We both die, our total estate is divided equally among the 4 kids. We are going to have a family friend we trust be the trustee until the kids are 25. After that, if I am dead, why do I care where my money is?
I think this is a silly thing to be upset about.
The reason it upsets me and
The reason it upsets me and maybe her is that I have a bioson who will need my assets and money to survive. Even if he is a well adjusted adult at the time of my death, I still think he should benefit from his mom's work...and NOT my SS which then funnels to BM.
My bioson has no one other than myself on which to rely. Her bio will have her DH, I know, but her SS has double the amount of support from extended family.
EXACTLY!! You are the only
EXACTLY!! You are the only person who seems to get this. If people didn't worry about what happens to their money after they were gone then none of us would get wills in the first place! SD is going to have an entire second family who will be taking care of her. My child will only have DH's parents (my mom died and my dad barely pays his bills). Why should we split things "equally" between "our" kids when one of them isn't even mine and will be getting an entirely separate inheritance from the other side of her family? It's absurd!
correct, so therefore I will
correct, so therefore I will need to reconsider leaving my policy solely to him!
That's a great plan unless
That's a great plan unless you die first and your wife assumes your estate and remarries. She then decides to have her will updated to leave everything to her new husband or her two kids and cut your two and the trustee out. Would you consider that something silly to be upset about? I personally think that ensuring the financial future of what will be my only child and my #1 priority in this life is not silly at all. Not knowing where life is going to take us is what makes this all so difficult!
We had our version of this
We had our version of this discussion a number of years ago. What we ultimately did was to do a joint Will that leaves everything to the surviving spouse if one of us predeceases the other and leaves the entire estate in trust to SS-23 (I adopted him) until he either turns 40 or completes a Bachelor's degree from a regionally accredited collee of university. The beneficiary allocation of our life insurance policies aligns with the is structure of our Will.
SS is an only child in our family.
In the event SS predeceases his mom and/or I the estate is divided 50/50 between my brother and my wife's 3 younger sibs upon our deaths. My brother gets half of everything and the other half is divided equally between my wife's sibs. If my brother and/or my bride's sibs do not survive us then their kids get that % of our estate/insurance. I understand your concerns and a version of this part may work for you. Your half of the joint estate and 100% of your insurance can go to your joint bio spawn with DH. Your joint bio spawn should get 50% of DH's half of the estate and 50% of DH's insurance if he survives you. You have no responsibility to provide inherritance to your Skid from your insurance or your half of the estate to your Skid unless you choose to.
I would suggest you get an atty to help you make all of this happen.
I 100% agree with your
I 100% agree with your distribution of our estate in the circumstance that we both die at the same time. The part that gets hairy is if i die first and it all becomes DH's estate. It then would be split 50/50 and that scenario is going to mean a couple hundred thousand dollars difference for our bio child vs. us dying at the same time.
We ran both scenarios on paper with a calculator and there is a confirmed major difference. I think that the fairest way to do it if one of us dies first is that when the second one dies we divide everything in thirds, because our child will have each of us as a parent, which accounts for 2/3 and SD has DH as a parent which accounts for 1/3. In the end she would still be making out like a bandit because of the entire 50% of her mom's estate that she would be receiving.
We met with an agent last
We met with an agent last night for us each to take out policies. This came after meeting with a lawyer first so that we knew our options. When the policies are purchased we then need to put our wishes into a will, which is why we were talking about all of this in the first place. BM just became widowed from her second husband last month, and is financially taken care of for the rest of her life between SS, pension and second life insurance policy. She has a 3 year old to husband who died. Fortunately the husband who died had two policies, one to go directly to trust for the 3 year old, and one for her care and wellbeing. (Unfortunately BM will have that portion squandered before she's 10). Anyway, when BM dies, her estate will be split 50/50 between the 3 year old and my SD. SD will be getting a very significant amount of $ from that estate. If that happens before she is 18 and we have to use a portion of that money to raise her, than I can live with renegotiating our wills so that the kids get equal portions. However, if that happens after age 18 then I say she is entitled to 1/2 of DH's money and 1/2 of her moms money, and none of mine. The same way that our bio child is entitled to 1/2 of dh's estate and my entire estate (since they will be an only child).
If I were you I would make it
If I were you I would make it so that each of you and your husband have 2 separate policies. You both have a policy that covers the spouse to an agreed amount should you die. You then both individually have policies that cover your children. He can cover his 2 50/50 or how ever he likes and you can cover yours 100% or even add in a niece or nephew or anyone you like too. Make sure guardians are put in place to manage the money should they be needed.
Also stop tying to guess what over people have in their wills and when they are going to die and trying to work out who will benefit. You don't know what is going to happen, stop making your guesses get in the way of working out a solution. Worry about your own family and having them covered. Life is unfair, some people will always benefit more than others. Just worry about protecting your own kid/husband. Let him worry about protecting his wife/children.
I think the Biochild of SM
I think the Biochild of SM should inherit all her portion and DH's split between all his bio's - this obviously includes SM / DH together child.
If both die at same time:
50% to Bio child - this is 100% of the SM's portion of assets.
50% split between DH Bio children - so if there is one step and one together child - the together child would receive 75% of entire estate and Step 25%.
This is fair as the SM is not her mom and step kid has a mom who will leave her an inheritance too. It is not the SM's responsibility to leave $$ to step kids regardless of their age.
This is how I plan to do it - even if DH goes first and I have all. I will value the assets at time of death and extrapolate estimated value at my demise. This dollar figure will go 75% to our Biochild together and 25% to SD.
Edited to add: My steps will not receive one penny from my assets - it makes me ill to think it. I worked My whole life and it is not for their benefit. That is for my Bio-son only.