life insurance

[mistoffolees]

There is nothing wrong with that but at whose expense? And was that expense taken into account when the amount of alimony was determined? If I'm working I can elect to take add'l STD or LTD. Similarly, the payee should have the ability to elect to take insurance.

Why in the world should the payor be obligated to pay for it?! And if you are going to order that a party be obligated to pay for a product that they don't want to purchase, the least that can be done is to count it towards alimony or provide a tax credit to the payor.

If the court ordered it, then it was taken into account in the original court order.

 

[Bali Hai]

If the court ordered it, then it was taken into account in the original court order.

You're wrong, the court ordered the life insurance without knowing what the cost to me was then, now or in the future. What kind of accounting practice would you consider this?

Furthermore, I asked that the term insurance be decreasing with the life expectancy of the receiver taken into account. The court said no.

So that means, after paying the receiver alimony for 40 years (for instance), if I pre-decease the receiver by 5 years (for instance), she gets the FULL insurance payoff plus all the alimony I paid AND free life insurance payments that I was ordered to pay without a tax deduction.

Answer this question with a yes or a no, would you consider this to be a windfall to the receiver at my expense?

 

[LdiJ]

You're wrong, the court ordered the life insurance without knowing what the cost to me was then, now or in the future. What kind of accounting practice would you consider this?

Furthermore, I asked that the term insurance be decreasing with the life expectancy of the receiver taken into account. The court said no.

So that means, after paying the receiver alimony for 40 years (for instance), if I pre-decease the receiver by 5 years (for instance), she gets the FULL insurance payoff plus all the alimony I paid AND free life insurance payments that I was ordered to pay without a tax deduction.

Answer this question with a yes or a no, would you consider this to be a windfall to the receiver at my expense?

I have to admit Bali that the fact that the judge wouldn't allow you to decrease the insurance amount as you aged was truly unfair in my opinion.

However, I think that I would have purchased whole life rather than term, so that the cost of the insurance would not increase.

I also see your point in making the payor pay additional alimony so that the payee pays for the insurance and the payor gets the deduction.

 

[LdiJ]

You know, Bali, I hadn't thought of the life insurance. Interestingly enough, I was ordered to retain life insurance with wording that makes ex the beneficiary on behalf of the children...I didn't have to get another policy to ensure he receives an allotment to replace alimony in the event of my death.

I re-reviewed my paperwork after researching a number of alimony court cases and most of them included a life insurance requirement. Maybe my attorney actually did something correctly in my case?!! If I had to obtain that insurance, I'd be looking over my shoulder constantly!

If you work, you elect to pay for LTD or STD over and above state minimums just in case. Yet if you receive alimony, it is not your responsibility to "elect" to pay for the insurance to cover you just in case...seems lopsided. But I really wouldn't want my ex to be taking a life insurance policy on me without my knowledge!! Don't know that there is a good answer to this issue.

You might consider doing a little bit of an "end run" around the judge. If you set up a trust, with your ex as trustee only as long as each of the children is a minor, and make the trust the beneficiary of the policy, you might protect the money for your kids a little better. The trust could be written so that each child becomes a co-trustee as they become a legal adult.

That gives them a little more protection.

 

[mistoffolees]

You might consider doing a little bit of an "end run" around the judge. If you set up a trust, with your ex as trustee only as long as each of the children is a minor, and make the trust the beneficiary of the policy, you might protect the money for your kids a little better. The trust could be written so that each child becomes a co-trustee as they become a legal adult.

That gives them a little more protection.

Two problems with that:

First, we don't know exactly what the court order says. Putting the money into a trust might violate the court order.

Second, it would not be tax deductible if done this way.

 

[mistoffolees]

You're wrong, the court ordered the life insurance without knowing what the cost to me was then, now or in the future. What kind of accounting practice would you consider this?

Furthermore, I asked that the term insurance be decreasing with the life expectancy of the receiver taken into account. The court said no.

Which merely proves my point. If you asked the court about a declining balance policy and they said know, then the court obviously DID consider the insurance in setting up the final decree.

They didn't have completely information, but no one every has complete information in a divorce. The judge used his discretion to require you to carry a policy. End of story.

So that means, after paying the receiver alimony for 40 years (for instance), if I pre-decease the receiver by 5 years (for instance), she gets the FULL insurance payoff plus all the alimony I paid AND free life insurance payments that I was ordered to pay without a tax deduction.

Answer this question with a yes or a no, would you consider this to be a windfall to the receiver at my expense?

What you don't get is that the settlement involves a totality of factors. The judge considered everything together in setting up the settlement. The fact that you don't like some of the factors doesn't mean that they're wrong.

I don't know the financial situation at the time. I don't know your ex's situation. I don't know your situation. I don't know how badly you pi$$ed off the judge with your antics. I don't know whether you were discovered trying to hide assets. I don't know ANY of the important factors, so it's impossible for me to say whether your settlement was fair or not.

In the end, though, it's over and behind you. You can choose to spend the rest of your life stewing over it or you can move on.

 

[Bali Hai]

Which merely proves my point. If you asked the court about a declining balance policy and they said know, then the court obviously DID consider the insurance in setting up the final decree.

They didn't have completely information, but no one every has complete information in a divorce. The judge used his discretion to require you to carry a policy. End of story.



What you don't get is that the settlement involves a totality of factors. The judge considered everything together in setting up the settlement. The fact that you don't like some of the factors doesn't mean that they're wrong.

I don't know the financial situation at the time. I don't know your ex's situation. I don't know your situation. I don't know how badly you pi$$ed off the judge with your antics. I don't know whether you were discovered trying to hide assets. I don't know ANY of the important factors, so it's impossible for me to say whether your settlement was fair or not.

In the end, though, it's over and behind you. You can choose to spend the rest of your life stewing over it or you can move on.

I pi$$ed him off pretty badly, but not as badly as I wanted to. I wanted to pi$$ him off to the point that he would actually get involved in the details of the case instead of letting his law clerk and the ex's lying lawyer call the shots.

 

[LdiJ]

Two problems with that:

First, we don't know exactly what the court order says. Putting the money into a trust might violate the court order.

Second, it would not be tax deductible if done this way.

Life insurance premiums are not tax deductible anyway. I wasn't espousing a way to make them deductible. I was addressing a different subject.

I can see her ex stiffing the children on the insurance money, which is why I made that suggestion.

 

[anteater]

I can see her ex stiffing the children on the insurance money, which is why I made that suggestion.

What does this have to do with the children?

If you are court ordered to retain life insurance on yourself to satisfy an alimony judgement...

 

[tuffbrk]

I don't care how badly Bali PO'ed the judge. That doesn't give the Judge the right to financially penalize him. That's an abuse of power, plain and simple. I'm very surprised, Misto, that you would even comment on that. We all know that judges are human and bring their prejudices with them to court each day. However, to imply that a financial slap is not just expected but also deserved due to less than stellar behavior? That is not one of the components of calculating a financial decision. Saying no just because they can. Imagine that.

Absolutely NONE of the marital expenses were taken into account in my case. They looked at my salary, including non-guaranteed bonus which I showed was decreasing dramatically (my company had recently merged with another company that maintained a different bonus perspective) and they just took a quick and dirty 32%. No CS from Dad.

Oh geez - I'm ranting. Sorry. I think if you have a nice "vanilla pudding" divorce with both parties primary concern being the children and the ability for all of the family members to continue in their pursuits you may wind up with something fair and equitable in the end. Probably along the lines of the results of your order.

I do believe that it is naive to assume that a legal expert has considered the long term financial implications of the order.

 

[mistoffolees]

Life insurance premiums are not tax deductible anyway. I wasn't espousing a way to make them deductible.

Apparently, you missed the post earlier in this thread where I corrected you once already. The IRS rule says "Life insurance premiums. Alimony includes premiums you must pay under your divorce or separation instrument for insurance on your life to the extent your spouse owns the policy."

So, if properly set up, life insurance CAN be deductible.

 

[tuffbrk]

You might consider doing a little bit of an "end run" around the judge. If you set up a trust, with your ex as trustee only as long as each of the children is a minor, and make the trust the beneficiary of the policy, you might protect the money for your kids a little better. The trust could be written so that each child becomes a co-trustee as they become a legal adult.

That gives them a little more protection.

My eldest is already an outright 50% beneficiary. I fought on including ex on my insurance policy and ensured the wording included "until 21 yo." My "baby" is 18 soon but still in school as a senior this year. It may be a wise move on his behalf. Really all that ex could do is sue my estate and I think it would be thrown out as the intention of the policy is to guarantee my continued support for our kids which would be the end result anyway. I will need to doublecheck the exact wording.

He is so short sighted he actually named all 4 children to receive equal shares of his "estate." His two eldest are done with school, successful in their chosen careers, married and producing grandchildren. He does not view our 2, both still in school, as perhaps requiring a bit more financial support before they get to the same page in life as the first two.

If I passed, the life insurance proceeds would be added to his "estate" and shared by the kiddies of the first marriage. Meanwhile, if first wife dies - and she is quite wealthy - he would not benefit at all and, as a result, neither would our kiddies. But hey - they are 2nd class citizens as they're my offspring.

Again, I'm on a rant. Guess it's because I have to go back to court again and that stirs up the emotions!!

Thanks Ld.

 

[TinkerBelleLuvr]

If the life insurance policies are not set up to be part of alimony, the suggesting of the beneficiary being a trust would be a smart move.

 

[LdiJ]

Apparently, you missed the post earlier in this thread where I corrected you once already. The IRS rule says "Life insurance premiums. Alimony includes premiums you must pay under your divorce or separation instrument for insurance on your life to the extent your spouse owns the policy."

So, if properly set up, life insurance CAN be deductible.

It can be deductible as alimony, IF it is set up that the spouse is the owner of the policy, which the obligor absolutely should NOT agree to...even if that means s/he cannot deduct it as alimony. You should never agree to someone else being the owner of the life insurance on your life, that you are paying for.

However, on an ordinary basis life insurance is not a deductible expense...its only if it can be classified as alimony via the receiving spouse having ownership that it can be deductible.

However, neither Bali's nor Tuffbrks life insurance is set up that way...and I definitely would NOT advise Tuffbrks to allow it to be set up that way, AT ALL.

 

[tuffbrk]

You called that one correctly!