Life insurance and inheritance

sheramber

Why not set up a trust that allows the survivor to live in the property and the value of the house at their death  is split equally to the children? 

With your plan the children of the first death get half the value of the house at that time but the survivor’s  children gat the whole increased value  at their parent’s  death. 

JMCF81

MyRealNameToo said:

JMCF81 said:

sheramber said:

If the surviving partner is to gift half the value of the house to the other partner’s children, how will that value be decided?  Market value?

How will you ensure that the insurance policy payout will keep up with the increasing  value of the value of the house? 

While the outstanding mortgage could remain static the  miscellaneous expenses figure and the half value of the house will not. 

Taxes will depend on what rules are in place at the time. 

The life insurance policy is renewed every 2 years and the figure adjusted accordingly to represent the equity in the house at that time period. The insurance money is in lieu or instead of the children receiving any money directly from the property, its just being used as a rough estimate to agree how much money to give the deceased partner's children so they aren't left with nothing when the house becomes the sole property of the surviving partner. 
We are only in our 40s, as we age and property value and finances change, different provisions may be decided. 

So you are buying a 2 year policy or you are buying a long term policy and just cancelling it every 2 years? 

What happens if one of you gets a significant illness thats non-termal but then makes the insurance unaffordable?  

How long is this going to be going for? Into your 90s if you are still living? Insurance at that age is expensive. 

None of these issues are your concern. The question that I asked originally is the only concern. 

JMCF81

sheramber said:

Why not set up a trust that allows the survivor to live in the property and the value of the house at their death  is split equally to the children? 

With your plan the children of the first death get half the value of the house at that time but the survivor’s  children gat the whole increased value  at their parent’s  death. 

Because the children will require their money immediately. In the case of my children they would not remain living in the property and would require finances to be able to set up their own alternative accommodation. If my partner survived me by many years (at this early stage in our lives) my children dont want to be left with nothing and waiting for money. 
The children of the deceased are only entitled/deserve the equity out of the property at the time of their parents death, not the value of the property in years to come when someone else has continued to contribute to it, add value to it, devalue it  etc... 

sheramber

Whoever dies first the survivor inherits the house  and the payout from the insurance company.

The insurance payout will not be part of the deceased partner’s estate. 

 You cannot dictate in your will what the person inheriting does  with their inheritance.

 It is their property outright.

The only way for the children to inherit half the property through a will  is to register the house as tenants in common with 50 % share each.
 Each partner can then pass their share to their children in their will. 

The surviving partner would then have to buy the inherited share from the children. 

JMCF81

sheramber said:

Whoever dies first the survivor inherits the house  and the payout from the insurance company.

The insurance payout will not be part of the deceased partner’s estate. 

 You cannot dictate in your will what the person inheriting does  with their inheritance.

 It is their property outright.

The only way for the children to inherit half the property through a will  is to register the house as tenants in common with 50 % share each.
 Each partner can then pass their share to their children in their will. 

The surviving partner would then have to buy the inherited share from the children. 

The house is to be left solely to the surviving partner. Ive made that clear through out my posts. 

INSTEAD we want to renew our soon to expire life insurance to ensure the surviving partner and the deceased's children receive money with as few tax implications as possible as soon as reasonable after the death. The "blended" family will go their separate ways which is why waiting around years for the surviving partner to die and release traditional inheritance from the property isn't an option.

The policy will be for between 2 - 5 years and will then be reviewed accordingly depending on our situation at that time and other arrangements may be made.

We dont need help deciding what we want to do with our property or how we want to give money to our children upon our death if it occurs in the next few years. We just want to know the process to carry out our plan.

From the responses I've received, it seems we put the life insurance in a trust and dictate in our will that's the plan.

Thank you everyone for your advice.

Weighty1

JMCF81 said:

sheramber said:

Whoever dies first the survivor inherits the house  and the payout from the insurance company.

The insurance payout will not be part of the deceased partner’s estate. 

 You cannot dictate in your will what the person inheriting does  with their inheritance.

 It is their property outright.

The only way for the children to inherit half the property through a will  is to register the house as tenants in common with 50 % share each.
 Each partner can then pass their share to their children in their will. 

The surviving partner would then have to buy the inherited share from the children. 

The house is to be left solely to the surviving partner. Ive made that clear through out my posts. 

INSTEAD we want to renew our soon to expire life insurance to ensure the surviving partner and the deceased's children receive money with as few tax implications as possible as soon as reasonable after the death. The "blended" family will go their separate ways which is why waiting around years for the surviving partner to die and release traditional inheritance from the property isn't an option.

The policy will be for between 2 - 5 years and will then be reviewed accordingly depending on our situation at that time and other arrangements may be made.

We dont need help deciding what we want to do with our property or how we want to give money to our children upon our death if it occurs in the next few years. We just want to know the process to carry out our plan.

From the responses I've received, it seems we put the life insurance in a trust and dictate in our will that's the plan.

Thank you everyone for your advice.

You seem to be totally ignoring what people are telling you, in that, as joints tenants, if one of you dies the surviving partner inherits the property 100%.  The children are not legally entitled to anything so the surviving partner is not obliged to give the children 50% of the property value.

In addition to this, if you place the life insurance in trust then whatever is dictated within your will is ignored in respect of the life insruance because your will only deals with your estate and a life insurance plan in trust is not deemed to be part of your estate.

Hey, but I've no skin in this game so you do what you want to do.....

kingstreet

A will is irrelevant here.

A joint tenancy means the property belongs entirely to the surveyor.

Writing the life cover in trust ensures the benefit is paid to the chosen beneficiaries in the percentages required outside the estate.

Professional advice makes the most sense to ensure complete understanding on all sides.

kingstreet

kingstreet said:

A will is irrelevant here.

A joint tenancy means the property belongs entirely to the surveyor.

Writing the life cover in trust ensures the benefit is paid to the chosen beneficiaries in the percentages required outside the estate.

Professional advice makes the most sense to ensure complete understanding on all sides.

Survivor, of course. Thanks, Nearlyold.