Life insurance question!?

Question

This is a weird situation. Ok My mom has remarried and now there is like 6 kids some step some real. Between my step dad and her they have an estate. Obviously it would be divded 6 ways with me included in the 6. However, my siblings are selfish and mean and I am looking for a way to get out of dealing with that. So me and my mom are going to do a life insurace policy on her. I would pay the payments and be the beneficiery. Now the question is. If everything is documented would the other 5 kids be able to sue me for any of that money? And would I have to pay taxes on it?

Answer 1

Sure they could sue anybody they wanted to.  But I wouldn't count on their being able to get anything from it.  Life insurance is a contract between the owner of the policy and the insurer.  No one else has a right to the payout if they are not named in the policy.  If you've been paying the premiums, it's none of their business.

Answer 2

She needs a will first.then put everything she wants shared in a trust.Have the excuter be a lawyer or banker not any friends or relatives.

Answer 3

LIfe insurance proceeds are paid to the named beneficiary only.  They do not become part of the estate.

Answer 4

Gotta love families squabbling over the goodies before Mom or Dad are even dead!

Anyone can sue anyone for any reason here in the USA. So yes, they could sue you. Could they win? Maybe, maybe not. But they could sure tie you up in court for a long time and make you waste money on lawyer fees that will eat up all that inheritance you think you are getting from the insurance policy.

Answer 5

When an insurance policy is issued, it creates an IMMEDIATE estate. As long as the total amount of the estate is less than, currently, 2 million, there will be no estate taxes to be paid. If it is over this amount, there will be estate taxes to be paid.

No, there are no taxes(federal) that will be paid.

The only way that your family could contest and win is to prove that your mom was not legally responsible for entering into a legal contract. Go forward with what you have planned.

Answer 6

Your mom can designate whoever she wants as the beneficiary.  No, you don't pay taxes on life insurance proceeds.