Life ins policy ownership

[n78949]

What is the name of your state (only U.S. law)? Indiana

My father died recently. He owned a Merrill Lynch life insurance policy that insured the life of my mother (still living). My mother is the beneficiary of my father's estate. Does she now own that policy on her life?

A ML rep tells me she cannot own a policy on her own life. Is that correct? The policy has some built up cash value that she could use. Thanks.

 

[anteater]

A ML rep tells me she cannot own a policy on her own life. Is that correct?

There is no legal reason that a person cannot own a policy on their own life. The only complication would possibly with estate tax. The proceeds would be considered part of the owner/insured's gross estate for estate tax purposes.

My mother is the beneficiary of my father's estate.... The policy has some built up cash value that she could use.

If mother is the sole beneficiary of the estate and the wish is to surrender the policy and receive the cash value, maybe let the estate's administrator surrender it rather than arguing with Merrill Lynch.

 

[Betty]

This is generally what happens per my experience as a life ins. underwriter &
verified per my life ins. law book.

If there is a contingent owner, they will become owner.

If not: Since your mother is still alive, no one gets the money yet. (no beneficiary) However; since your father was the owner & the policy has a cash
value, it must be submitted for probate. It's an asset. The court will assign ownership to someone else.

Whoever is named owner, can surrender the policy for the cash value or
continue the policy in force. It seems in your case since your mother is sole
bene of your father's estate, she will be named owner.