If something happened to your SO, could you survive financially?

[greenbriar]

Hubby and I have been doing some figuring and if anything happened to either of us, the other would be not so financially sound even after life insurance because of what the government would take.

[rwheeler31]

1. No

[lost-in-nj]

2. not sure yet

:hug:

but I think so


right now we are both

in each others wills
but after the divorce

I really think
I will be ok
ok
maybe hope :)

GB

try to find an accountant
someone who can help you in your decisions



lost

[AlCzervik]

3. Life insurance proceeds are generally tax free.

yes i could survive, i wouldn't be living huge but i'd be living.

[lse7581011]

4. What SO

I'm doing it all on my own!

[lost-in-nj]

:hug:


will be here

soon enough


lost

[lse7581011]

Not Saying It's Easy

but I have no one to answer to but myself!

[Lorien]

38. It's actually not easy at all, especially if your health isn't great

Personally I've got fibromyalgia, chronic fatigue, vascular problems,vision problems, clinical depression and adult ADD. I'm self employed and it's a nonstop struggle to keep going. I've known A LOT of single women in a similar boat. Some have even had to find ways of coping with cancer and MS on their own. It's tough when your a single man, too-but at least they don't have to deal with the gender discrimination that exists in so many fields.And if a single woman with health issues has kids....??? Well, THAT as we all know can be REALLY tough!

[eyesroll]

5. The government doesn't take anything when it's inherited between spouses.

And the estate tax only kicks in for large estates ($2 million? I don't know offhand).

Does the government have a huge lien on your property or something?

To answer your question: I'd be financially fine if my partner left, or died. I have income and assets of my own.

[greenbriar]

7. I thought the government would take a part of the life insurance

if they don't then we would be okay

[AlCzervik]

9. life insurance does not pass through the estate---see Ken Lay's widow.

and all they people they fucked over that won't get a dime from his life insurance.

[eyesroll]

11. Not unless I'm missing something...

Assuming your husband isn't in actual debt to the government (which, then, the government can go after his estate as a creditor)...all life insurance proceeds are payable to the designated beneficiaries. Life insurance proceeds paid upon death are not taxable as income to the recipient.

I am not sure whether life insurance is taxable as part of the estate, but like I said--spouses can inherit from each other tax-free, and the exemption for other parties is pretty huge.

[greenbriar]

12. In that case, I would be fine

his life insurance would pay off all our debt and the house would be free becasue we have that survivors benefit...


I am nto as worried now

[pnwmom]

17. NO, NO, don't rely on any tax advice you get HERE!

Sometimes life insurance IS included in an estate, sometimes it isn't. It all depends on how your estate is set up. See a lawyer. Make sure it's done right.

[eyesroll]

31. I agree with you on the "don't rely on tax advice you get here" thing.

See a lawyer or an accountant who specializes in this sort of thing. (I am not a lawyer yet, and I am a semi-anonymous yahoo on the Internet in any case.)

But if life insurance is going to a spouse, it doesn't matter if it's in the estate or not--it's not subject to the estate tax. Estates of billions of dollars pass tax-free from one spouse to the other.

That said, when the other spouse dies, the estate may be taxed when it passes to the next generation, so you do want to see an expert to minimize the potential for loss.

[medeak]

39. wrong wrong wrong

spouses cannot inherit from each other...although we have already paid taxes on income...if spouse dies..you will be taxed on any assets over $500,000

Have family trusts set up...give money to kids so they won't be taxed..have paid greatly for financial planning and it was well spent.

[eyesroll]

46. I suppose your state may have an estate tax that's different...but federally:

http://www.law.cornell.edu/uscode/26/2056.html

The term is "unlimited marital deduction." Unless your spouse isn't a U.S. citizen, assets pass tax-free, in life and in death.

http://www.prudential.com/view/page/12021
http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P12_5725
http://ctprobatelaw.com/estateplanning.cfm

And where did you get that $500,000 from? The federal threshold is $2 million.

[medeak]

49. Iwill check with my accountant and attorney

we have no state income tax of any sort (NV)

$500k...where do I get this from? Father-in-law just died...and we realized what a horror it is...went to attorney and set up family trust...we have complicated finances (7 LLC's)

[Breeze54]

54. And here I thought you knew everything!! You mean you don't?! n/t

[LSK]

81. get another lawyer and accountant, they are lying to you

And possibly ripping you off.

[dysfunctional press]

45. insurance settlements are generally tax-free...

from car to life, if you get a settlement check from an insurance company- it's almost never taxable income.

[medeak]

35. it's $500,000

first $500,000 is tax exempt... then taxable. We have insurance policies just to pay inheritance tax.

when you think of home ect...$500,000 is not that much at an older age.

edited to say...75 yr old mother in law is now working due to inheritance tax...she thought she was set for life.

[LSK]

79. Bush changed it to $2million, was $675,000 before

and after $675k you are taxed 55%.

http://en.wikipedia.org/wiki/Estate_tax_in_the_United_States

ear


Exclusion
Amount


Max/Top
tax rate

2001
$675,000
55%
2002
$1 million
50%

2003
$1 million
49%

2004
$1.5 million
48%

2005
$1.5 million
47%

2006
$2 million
46%

2007
$2 million
45%

2008
$2 million
45%

2009
$3.5 million
45%

2010
repealed
0%

2011
$1 million
55%

[MissB]

6. Are you counting Social Security survivor's benefits?

Especially if you have kids....

Both of us have a lot of life insurance - more than enough to pay off the mortgage if one or the other of us dies unexpectedly.

[Fuzz]

8. Not a chance

[taught_me_patience]

10. We both are working professionals

she a doctor and me a manager. Either of us would be just fine.

[Richard Steele]

13. No. Not for a week.nm

[Arctic Dave]

14. We could, but we are lucky. I don't think a lot of people are anymore.

We both have a good size 401k, savings and other invstments. Most of it comes from both of working since we got out of high school, were we met, and twenty years to save. It wasn't always like that though. The first fews years when our daughter was born was a lot of top ramen, used everything and side jobs. The good ole days?

[classof56]

15. Nope. Both our offspring are in for a surprise--it's up to them to see that mom

and dad remain solvent to the end. Sorry, kids--you've already spent your inheritance and you can only hope we don't live as long as your grandparents--72, 82, 86 and 96 respectively.

Helluva legacy, huh??

Tired Old Cynic

[pnwmom]

18. I think you better let them know. Surprises like that don't help anybody. n/t

[classof56]

19. Actually, they pretty much know.

As I tell them, it's like that bumper sticker on high-end RVs--"We're spending our children's inheritance." We've already spent it--on them! I try hard not to think too much beyond next month, 'cause as we know, life's uncertain--eat dessert first! I'd like to think they'll be fine, but with what Bushco is doing to the country, it's hard to say. Mostly worried about my grandchildren! Gosh--seems eons ago that my SO and I met and married in Seattle, when everything we owned fit in a sport car. Ah, the good old days!!

Blessings!

[pnwmom]

21. Thank you, classof56.

We moved out here going on 30 years ago and I'm grateful to be here every day.

[JeanGrey]

47. My kids won't be able to take care of us. They can hardly

manage to take care of themselves.

[classof56]

70. I hear ya, Jean!

Not that I really expected my kids to take care of me, but dang, I wish the country was a better place for them and their kids. I tried my best, but who could have anticipated Bushco and the way he's thoroughly messed things up? Some days I wonder if things can ever be right again, but there's a ray of hope that is always somewhere within. As we used to say in the 60s--keep the faith!

Tired Old Cynic

[JeanGrey]

76. Bush has nothing to do with my kids. They have messed up

totally on their own, I'm afraid.

[Individualist]

16. The only SO I have is my cat

[Buzz Clik]

28. I hope your cat doesn't read DU. That was pretty demeaning to fluffy.

[Individualist]

71. Honey is actually glad I consider him my SO

He would, however, consider it extremely demeaning if I referred to him as my pet. :)

[DesertFlower]

20. i would do very well.

over $700,000 in life insurance, the 401k which is substantial, his pension and his social security. the mortgage is only $80,000 and the house is worth about $600,000.

we don't have any other debt.

[sicksicksick_N_tired]

22. Great question.

That's all.

[ancient_nomad]

23. No..n/t

[ileus]

24. Life insurance and SS should cover it, then I'd have to hit on the neighbor...

she's cute, makes 80k and single....

but for now I'm kinda fond of the wife so, she'll have to do.

[cynatnite]

25. SS, VA and a small life insurance policy...

We'd make it fine. Would still be paying bills, but I do that now anyway.

[stillcool]

26. If I wanted to..

It is not necessary to change. Survival is not mandatory.
- W. Edwards Deming

[Buzz Clik]

27. Yes, but I'd be moving to a different house. And I'd get rid of the fucking dog.

[seabeyond]

53. lol on the dog. i would keep my dog, but would move to a much smaller house n/t

[pitohui]

29. the gov't doesn't take anything unless the estate is more than $2 million

we don't have anything close to that so i guess we don't have to worry!

[scarletwoman]

30. I've been supporting myself with no partner for over 12 years.

And until May 2007 I was supporting my youngest son as well, until he graduated from college.

I guess I probably don't understand the problem.

[greenbriar]

36. no problem

just a question

since it is tax time, we have been talking a lot about finances and it led to a discussion on the what if

[shanti]

85. me too

self-supporting for most of my life and raised my sons on my own. even when i was married (both times), i paid the bills. always have been extremely independent.

it's scary to think that someone can't handle life (financially) without a SO.

[RB TexLa]

32. Yes, as could she.

[Generic Brad]

33. I could

And vice versa. We are months away from being debt free. Long ago we figured that the only way we could get each other in that position was to pay off the mortgage about 15 years early. And we have almost made it there. But it came at a price. It meant 15 years of no fun, no extras, and no vacations.

[medeak]

34. ironically was sent this article from Wall Street Journal today

from today's Wall Street Journal:
Women often fall short in planning for retirement. Typically, their incomes (and nest eggs) are smaller than men's and they live longer. Two resources can help. "What Women Need to Understand About Retirement," published by the Heinz Family Philanthropies and the Women's Institute for a Secure Retirement (WISER), provides a solid overview of finances and health care in later life. You can read and download the 78-page book at heinzfamily.org/programs/ebook.html.
And...MetLife's Mature Market Institute (also in tandem with WISER) has published "What Today's Woman Needs to Know: A Retirement Journey." Among the features: checklists for women to help with retirement planning. Go to MatureMarketInstitute.com and select "Our Diverse Society."

[Breeze54]

37. I had one and then I didn't and I wasn't .

Women are almost NEVER better off financially after the loss of a husband.

------------------

WOMEN AND DIVORCE - A MINI-LESSON

http://www.ai.org/dfi/education/MiniLessons/womendiv.ppt

In divorce, who suffers more financially, women or men? Divorce has significant impact on the financial situations of both spouses as they divide assets and establish separate households. Women often experience greater hardship because they have custody of the children, their incomes are usually less than their ex-spouse's, and they may have accepted a minimal financial settlement during the divorce. Smart Money reported that 26% of women experienced a decline in their standard of living in the first year after divorce. (death of spouse)

Any woman, whether married, divorced, separated, or widowed should check to see that the credit bureau has accurate and complete credit information in her name.

Financial Independence

Women who plan for financial self-reliance are more likely to be prepared to meet widowhood, divorce, or other life changes than those who do not. Suggestions for gaining financial independence include:

o Establish credit in your own name so that you have a credit history independent of your spouse. Even with no income of your own, you should have separate savings, checking, and credit accounts. You are responsible for managing your own accounts and no one can supervise your accounts better than you.

* With credit cards, you need to oversee the card's use. Make sure that your spouse does not run up an excessive amount of charges that together you cannot repay. You can do this by calling the credit card company regularly to check the status of the account.

* Establish a bank account in your name when you close all joint accounts. You need access to cash for living expenses. A three to six month cash cushion is advised for day-to-day expenses.

More Facts....

[medeak]

40. am shocked by the ignorance on DU

perhaps we should be more like repubs in one respect..financial responsiblity and knowledge?

[Breeze54]

43. What "ignorance"?

You have to add more substance to that comment.

[medeak]

50. substance indeed

there is none here....it's all PollyAnna time

[Breeze54]

51. How high is that horse you're riding?

I think you're mixing up ignorance with lack of knowledge about insurance and probate and how it all works.

Mighty high and mighty there... climb down slowly and try to breath the air the rest of us breath.

[medeak]

55. am security freak

you have me questioning that I need to update things...perhaps am unaware that Bush totally nixed "death" tax? Have been responsible for many decades for my family. My finances are incredibly complicated...no high horse here...just concern for everyone and hoping everyone thinks about the inevitable.

am recovering from writing 6 figure check to IRS today :-(

edited to say..am happy to hear your son is home from Iraq. That's really what life is all about eh?

[tammywammy]

41. Life insurace is generally not taxable

Life Insurance Proceeds

Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract.

http://www.irs.gov/publications/p525/ar02.html#d0e5141



Also, since I'm not married, I don't have to worry about that. I pay my own mortgage and car payments just fine. No credit card debt. :) My current life insurance is payable to my father and is so that if I did die, he could pay off the car and make house payments or pay off the house.

[conflictgirl]

42. Not even close

We're barely making it now.

[dysfunctional press]

44. it's the only thing that's keeping her alive...

:evilgrin:

[JeanGrey]

48. Hubby would be fine. I have 500,000 in insurance and about

400K in 401K. But he'll outlive me easily as I have cancer. I'll also be leaving him a paid for home, two paid for vehicles, and my retirement check.

[medeak]

56. JeanGrey....lighting a candle for you!

Cancer is not a death sentence I pray! Please know am sending healing thoughts your way...hope you feel enveloped by positive light!

((((HUGS))))

[JeanGrey]

59. Thank you. I battled through a transplant five years ago,

cancer last year, and reocurrence this year. It's been a rough five years. I'd already be gone without the best husband in the world!

[medeak]

60. You're a force of nature!

can "see" that about you.....

Jean..there's something about you...hell..you'll think am nuts..but feel a wonderful lightness of being talking to you.

[JeanGrey]

66. Well, thanks. Sometimes I feel like an old used up washrag,

LOL. I keep hanging in there, for whatever reason I'm still here.

[seabeyond]

52. yes. we got lucky the last couple years and i think we will be ok. regardless n/t

[libnnc]

57. No way.

I'd be okay for a couple of months but no longer than that.

[bermudat]

58. yes

[havocmom]

61. Planning another cruise?

I had to put up with a very well off client BEGGING me not to charge my usual fees for alterations on a bunch of clothes she just bought, because "with the economy and all, we've already had to cancel a couple of cruises".

I made about eight grand that year and she was expecting ME to charge less out of pity for her lifestyle adjustments for the downturn in the economy at the time.

FACT: we survive. We may not love our financial situation, but we fucking face reality and SURVIVE. There will ALWAYS be many with much less. Live within means and look for more simple, sustainable pursuits and diversions.

[medeak]

62. gawd...was that my mother-in-law?

sure sounds like her!

[havocmom]

63. There's a bunch of economically fortunate but empathy-poor dim bulbs around

When it's just the money that counts, they are really very, very poor because there is never enough money to compensate for the lack of a soul.

[medeak]

64. yep! that's her! n/t

[Throckmorton]

65. Yes, unfortunately Mrs. Throckmorton died 4 years ago.

I managed to keep the house, but had to sell property I had bought in the Berkshires 20 years before. I Also had to borrow against my 401-K. But that was several years ago, and now I'm doing quite well actually. I got remarried last years, and my new SO just adopted my children from my first Marriage,

Oh, and one more thing,

I Still Love You April,

The Government does not tax Life Insurance.

Throck

[Skittles]

67. I don't rely on anyone - period

[shanti]

86. you got it!

i'm the same way :hi:

[Firespirit]

68. Don't have one

It'd be damn nice to have a second income, though. The cost of living is geared to couples, or two-income households.

[VenusRising]

69. Not a snowball's chance in hell.

:sigh:

[TroglodyteScholar]

72. Yep, and something did happen to my SO....

...she took off!

But if I had a kid, my answer would most likely be different....

[leftyclimber]

73. No

But to be fair it's reciprocal. We have a financially symbiotic relationship.

[Stinky The Clown]

74. If something happened to my SO, I couldn't survive spiritually

[JerseygirlCT]

75. Probably, but it would be very tough indeed.

Another reason I don't much like to think about that possibility!

[PVnRT]

77. Yes - I make almost twice as much

Which is sad when you consider she's a science teacher with a master's degree. Something is not right here.

It would be tight, though - we have a lot of combined debt to be paid off, and it's hard to do that on one income.

[Javaman]

78. yes, but I would have to live really lean. nt

[NewJeffCT]

80. yes, probably

the life insurance proceeds would pay off the house and would likely fund most of my daughter's college education and we have no other debt. As long as I maintained a decent job with health insurance, I'd be fine.

[sakabatou]

82. We're not married yet

and I'm still in college, but struggling to find a job due to my illness.

[LibertyLover]

83. Yes, I would be

since he doesn't work and I'm the sole income source for our family. Frankly, I've considered divorcing him because I'm tired of supporting him and his various hobbies. I could definately live better without him.

[dropkickpa]

84. n/a

I do it all on my own, have since Dropkid was born. She'll get a modest life ins settlement when I kick it.