My mother is now deceased and my brother wants me to start paying 1/2 of the premium. We are both beneficiaries. If I decide to do this is there any restriction for him to add me as co-owner since I will be paying 1/2 the premium?
2007-02-05 11:08:53 · 5 answers · asked by asil 1 in Business & Finance ➔ Insurance
Owners of a life insurance policy has complete control on what they want to do. Since your mom is dead, it is up to your brother to continue paying the premiums. Your brother may be able to add you as the co-owner.
Having ownership of a life policy enable you to change coverage amount, have complete control on the cash value (if there is any), and change beneficiaries. Since there are currently one owner (your brother), he has complete control. If he adds you as the 2nd owner, then all decisions must be agreed upon both of you.
As for your dad, he has nothing to worry about. As long as someone is paying for his life policy, he shouldn't mind.
2007-02-05 11:24:27 · answer #1 · answered by Anonymous · 4⤊ 0⤋
You need to be careful here. If your brother adds you as a co-owner he will be making a gift of half of the cash value to you when he adds your name to the policy. If this is more than $12,000 he could owe a gift tax. He could borrow against the cash value in order to lower the value for gift purposes.
He he doesn't add you now as a co-owner and simply gives you half of the death benefit when dad passes he is making a gift at that time which would probably be worst than now as the loan idea won't work then.
By paying half of the premium without being a co-owner you would be making a gift to him and would not be creating any ownership in the policy even if you know that he is using the money to pay the premium.
Contact a good estate attorney and let them guide you through how to best accomplish this transaction. Good Luck!
2007-02-06 06:51:44 · answer #2 · answered by waggy_33 6 · 0⤊ 0⤋
Just because you're paying half the premium, does NOT make you a "co owner". You'll need something IN WRITING from the insurance company that shows ownership has been transferred. USUALLY, policy ownership is NOT transferrable.
Which means . . . is your brother REALLY a co-owner? Or is he just paying premiums?
You need to talk to the agent that sold you guys that policy. Or better yet, ask your brother to see a COPY of the policy - the OWNER will be listed right up front on the first page.
2007-02-05 21:07:10 · answer #3 · answered by Anonymous 7 · 0⤊ 0⤋
As sole owner of the policy your brother has total control. Your Dad has none.
If your brother wants you to pay 1/2 the premium, fine. Idon't see anything wrongwith that as you and he will be getting the policy proceeds when your father passes.
But before I would agree to that I would insist that your brother remove your Mom as a co-owner of the policy (providing a copy of her death certificate) and add you as a co-owner. The way it is now he can change the beneficiary, or he could decide to cancel it and take all of the money. Not that he would, but why take the risk?
2007-02-05 19:42:15 · answer #4 · answered by Wendy S 4 · 0⤊ 0⤋
I do not think he can add you now. Only dad can add you. Otherwise you would end up paying for several years and later on he will get the proceeds. This is because he would be the only one that is alive and is a beneficiary.
For more you should check with the attorney.
2007-02-05 19:15:59 · answer #5 · answered by Sam P 2 · 0⤊ 0⤋