The firm of Steven H. Kobrin, LUTCF
I am second generation in the life insurance business, and have brought our local general agency on to the national stage. In doing so, my team and I have created an independent brokerage with a truly unique platform of services, for both consumers and their advisors. These include:
* A policy for virtually every applicant, from preferred risk to high-risk.
* Applications approved at the rate quoted
* Complementary policy audits for all clients to ensure optimum product performance.
When I am away from my desk, I am spending time with my family, especially my darling granddaughter. I am a serious martial arts practitioner, as well as a student of philosophy, religion, and psychology.
BA in Liberal Arts
I am licensed to sell life insurance in every state except Alaska and Hawaii.
There's a lot going on here. Let me try to break it down according to the various concerns you might have:
Need for the benefit
Sure, you have enough invested; but how much of it is liquid? With these two policies, your beneficiary could get $100,000 within a week or so. Would that money be needed? You don't want them to have to liquidate invested assets prematurely.
To make this decision, it would help you to know exactly how much tax would be due upon surrender. The carrier would be able to tell you the cost basis of each policy. You would then be taxed on the difference between that amount, and the cash surrender amount.
51 is comparatively young. Are you absolutely certain you will never need life insurance again for the future decades of your life? If you do, then the cost will certainly be much higher than what you're paying now; plus, you can't assume you will always be eligible for the lowest rate.
If the money is really a surrender of cash value, then you would be taxed on an amount above the cost basis. You can ask the insurance company for the cost basis, and then go to your accountant to calculate any taxes due.
If the money is actually a death benefit, then you shouldn't be taxed at all, unless there was some kind of transfer for value transaction. That could happen when a policy changes ownership. Ask an attorney who handles financial matters for their advice.
The owner has control of the policy. That means that coverage can be terminated if she wants to. This raises a few questions:
When you say “cash in,” do you mean for cash that is inside the policy? Why are you using a permanent, cash value policy to meet the terms of the divorce decree? Isn’t the need for coverage temporary, and if so, why aren't you using term insurance, which would not accumulate cash?
Why aren't you using a trust so that you can assert the control you are looking for? If you set up the trust correctly, you wouldn't have to worry about anybody depriving your children of their benefit.
Who is guiding you in this process? You need to have a divorce lawyer who understands the use of life insurance.
Here's an idea for you: use a First World problem to solve a Third World problem. Talk to a good estate planning attorney and set up a charitable giving program to help people in need. There are many people suffering in this world, and some of them probably live on your block. Structured properly, this program could alleviate hardship for years to come.
And you know what the best part of this commitment would be? It could make you a better person. When you dedicate a portion of your resources to helping others, you become more of a giving person. Not only that: when you give more, you get more.
A charitable giving program with your extra money would be a win-win all around.
That's a tough situation. I appreciate your desire to give your mother a proper burial, and the hardship of not having the money to pay for it.
I don't think there's a way for you to take your child's money, but to get a legal answer, you need to talk with an attorney. Assuming you can't, you will still have the problem of getting additional money to pay for the burial. I suggest you contact your local religious congregation, or some other communal welfare organization. They usually have charity funds available precisely for this purpose.
I am sorry for your loss, and wish your family strength. Happy holidays!