LIFE INSURANCE - BENEFICIARY OR ESTATE?
Uncle Jim:
Both my wife and I have term life insurance. We have each other as beneficiaries with the children secondary beneficiaries.
I hear that is NOT a good idea.
Beneficiaries should be the estate, not a person.
Whom do you think should be beneficiaries? And any other suggestions?
Another question I have is: I have a lot of money in old savings bonds that are currently collecting ZERO interest. They are too old to roll over. No matter what I do, I will have to pay the taxes. Any ideas on good things to invest or spend on? Or what I should do with these old bonds?
Thank You
(unsigned)
Unsigned,
Term life benefits pass to ANY beneficiary - TAX FREE.
In the event of the common cause death of you and your wife the benefits still go to your children –TAX FREE.
If the death benefit goes to your estate it could become taxable if the estate is large enough or left to other than your children.
The arrangement you have in place seems best to me. Rules change so check to be sure.
Holding on to anything gaining no interest is losing value due to inflation. Unless your tax bracket drops significantly in the near future you probably have to bite the bullet and cash them in. If the amount of interest forces you into a higher tax bracket you might want to consider cashing them in over a period of years.
Life insurance of any type should only be held in place as long as there is NEED. If your home is paid off, your kids are independent and your retirement is secure – why pay for life insurance?
If your kids are “solid” why not consider financing their automobiles or writing their mortgages. They get a lower mortgage rate and you get a higher interest return.
Spending is totally subject – by all means set aside and enjoy designated fun money. Items of gold, silver, or precious stones have resale value. Shopping can locate item wherein most of the cost is weight in gold. Plain bracelets are attractive and if you shop you can get a very high gold to ornament ratio.
Enjoy,
Everybody’s Uncle
