Are Life Insurance proceeds subject to trust fund?
My wife’s mother passed away, and in her will asked that money for her sons be placed in a trust until a certain age. However the only money she left was proceeds from a life insurance policy that my wife is the sole beneficiary of.
Will that money be taken from her, and placed into trusts for her brothers, or will she be able to just pass along the portion that their mother wanted them to have, and thereby avoiding the trouble of setting up trust funds that would pay out in just a couple of years anyway?
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September 16th, 2010 at 10:26 am
The life insurance money gets paid directly to the named beneficiary. It is then their money, and they can do anything they want with it.
If her estate HAS no assets, then there’s no money to put INTO the trust.
The trust cannot take your wife’s money from her.
Your wife certainly can pass along any money from the life insurance that she wants to pass along. She should probably consult an accountant, as depending on the amounts, she COULD be subject to paying gift taxes for any money she gives to them.
September 16th, 2010 at 10:26 am
there is no such provision of insurance policy proceeds.If the beneficiary is major i.e 18 or more age
entitled to receive whole money from insurance.
Kindly contact directly to insurance for claim payment or you may complaint to IRDA .
September 16th, 2010 at 10:26 am
Or she could just keep it all for herself and not let them have anything. This would not be the morally right thing to do, but it is an option.
The life insurance benefits go to the beneficiary of the life insurance policy. Period, end of sentence. No matter what the will says, the life insurance benefits still go to the beneficiary of the life insurance policy, even if the will says something else.
The will controls (1) life insurance money left to the "estate" and not a named beneficiary, and (2) assets other than the life insurance. If that is nothing, then it is nothing. The mother can ask for whatever she wants, but if there is no money of hers to put into a trust fund, then there is no money to be put into a trust fund.
The beneficiary controls the life insurance money and decides what to do with it. It is her money. Give it to the brothers. Put it in a trust fund. The only reason that it must not be used to buy heroin is that buying heroin is illegal.