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Life Insurance for Non-Custodial Parent

helena_brass's picture

I have a couple questions regarding life insurance for the non-custodial parent who is paying child support (no alimony). We live in California. My SO is about to sign up for a life insurance policy with his new company.

1) He would like to put his kids on there from his previous marriage, but he is afraid that if he does and he dies before they turn 18 that his ex-wife will receive the money. Is this true?

2) If so, he has asked me to be the sole beneficiary instead. Then he would like me to divide the money between the kids, after paying the burial costs, and only provide it to them once they turn 18. Is this a reasonable solution? Or will she be able to come after me for the life insurance money to make up for child support?

My SO does not have many assets. He has a 1990s Chevy, a few guns, and perhaps a few other things here and there. He doesn't have a 401K. I know that she could apply to receive checks from Social Security in the event of his death, but will she be able to come after me for the life insurance? Would it make a difference if we were married at the time of his death? Also, if we were married, could she come after my income for child support?

AlreadyGone's picture

If she was married to him for 10 yrs or longer, she could receive SS under his earnings. If you are married to him for 10 yrs or longer, you could too. Of course, this would be after either of you hit retirement age. Obviously, she can collect SS for any minor child under him but, coming after you for his life insurance... not usually. Though, this could vary depending on what state you're in. It is best to have an estate attorney take a look into this.

My xH divided his life insurance into thirds. In the event of his death, before the SK's (2) reached majority, the money was to be held in trust with his sister as the executor to the SK's until they reached the age of 21. This was so the BM didn't get her greedy little hands on the money.

My life insurance was also divided into thirds. I figured if his kids got a cut, so would my brother and niece. Of course, xH wasn't too happy with that but, I gave him exactly what he gave me..... one third!

helena_brass's picture

They were only married for 7 years. She can still collect social security for the kids though. I just worry that she would try to get the life insurance money or, in the case we were married, my income. I know she would love to take money from me.

twopines's picture

It's my understanding that the life insurance goes directly to the designated beneficiary (if still alive), and is not part of the estate.

Igiveupsotornupinside's picture

Yes this is true as we just learned this while making a will with a lawyer. The will is separate from the life insurance. Life insurance is issued to the designated beneficiary as long as they are alive and most life insurances list beneficiary #1 and #2 (for if #1 passes away before life insurance is handed out). If he is worried about his kids and BM getting part of it this is what I think he should do.

When he puts the kids down he should put someone responsible for it until the children are adults. Like my hubby has it this way. I am in the #1 spot and then he listed his sister for #2 in case I should pass before it. He then told his sister how he wants it split up and at what ages for each kid. She is fine with doing this if it should ever happen and we completely both trust her that the kids will get the money and to what portion each of the 4 are to get.

AlreadyGone's picture

She can't touch your income, married or not. Period. If your SO has a valid will, she can't get squat other than what is in the will.... aside from SS for the underage kids. Might be a good idea to visit these scenarios with SO and then have it in writing. Better to be safe than sorry.

Stupidlyoptimistic's picture

To my knowledge, she would not be able to get your income or the life insurance, assuming the children are not beneficiaries. She would receive SSI for any minor children remaining. I would double check with an attorney to be sure, though.

Journey1982's picture

Tog...I don't believe BM can get any of the life insurance money before the children are 18 to go toward their support if she is not listed as a beneficiary. When my cousin died he had twin 16 years. The beneficiary was his girlfriend (ugh!) and in his will he stipulated that she was to give his twins money "as she saw fit for their education, needs and support." Hate to speak badly about my dead cousin, but he was such a fool. His girlfriend took the money, left the state and the kids got none of the insurance and neither did BM for any CS. My aunt spoke to two different attorneys and was told there was nothing they could do get the insurance money for the kids. Very sad situation.

Rags's picture

You can stipulate a trust as the insurance beneficiary with the trust going to the Skids when they turn 18.

We went this route. My DW is my sole heir and beneficiary and I am hers. In the event of our joint demise SS is the heir and beneficiary of our estate.

To prevent the SpermClan from benefiting in any way from our estate or life insurance our policy beneficiary declaration and our Will put it all in trust until the Skid turns 40 or graduates with a BS degree from a regionally accredited college or university. The 40 or BS thing is our way of parenting from the beyond if necessary. It was also designed to specifically prevent the SpermClan from having any access to our estate in the event something happed to both of us.

Both my DW and I would rather have it all donated to charity than give the SpermClan one penny of benefit from our hard work. Fortunately the kid has a good head on his shoulders and is becoming a young man of character. He will in all likelyhood meet the Bachelor's Degree stipulation long before he turns 40.

Even I who was on the 11 year undergrad studies plan beat the 40year stipulation by a decade.