According to TMZ, Bethenny Frankel means business, even in divorce. She wants Jason to pay child support and a lot more.
Bethenny filed for divorce last week against Jason Hoppy. Now we've learned ... Bethenny -- who is reportedly worth between $25 million and $55 million -- has filed legal docs asking for the following from Jason:
--- Child support ... retroactive from the date she filed for divorce
-- Medical, dental, optical, therapeutic, and orthodontic expenses for HER and her child
-- Life insurance that makes both her and the kid beneficiaries
Read more: http://www.tmz.com/2013/01/07/bethenny-frankel-ex-jason-hoppy-divorce-child-support-prenup/#ixzz2HOoXRrAS
What Bethenny Frankel should know when asking for a Life Insurance Policy to give to her child?
Life insurance proceeds are usually subject to death taxes, depending on the form of ownership. Therefore, proper ownership of a life insurance policy is very important.
If you own insurance (or even retain the right to change the beneficiary of the policy) on your own life, the death proceeds are part of your taxable estate. To put it simply, if you are single, and have a $600,000 policy, and $100,000 of other assets, at your death, your estate will owe $37,000 in taxes.
If the beneficiary owns the policy, there are no taxes at your death; the policy is not taxable in your estate because you didn't own it.
Young beneficiaries pose a problem. A young child cannot (or should not) be outright beneficiary of a life insurance policy.
The best method of owning insurance is in a Life Insurance Trust.
[A Life Insurance Trust different from a Living Trust. It has different rules and purposes.]
A life insurance trust is a trust that is set up for the purpose of owning a life insurance policy. If the insured is the owner of the policy, the proceeds of the policy will be subject to estate tax when he dies. But if he transfers ownership to a life insurance trust, the proceeds will be completely free of estate tax. (The proceeds will be exempt from income tax either way.)
Given the current estate tax rate of 35%, a life insurance trust can save hundreds of thousands of dollars in estate taxes.
When a Life Insurance Trust is formed, you name a person to manage it. Normally, that will not be you or your spouse.
If you have an existing life insurance policy, you can put that into the Trust, or you can have the Trust buy a new policy. The annual premiums are paid from funds which you contribute.
A Life Insurance Trust is irrevocable. If you form a Trust for the benefit of all of your children equally, and later would like to `disinherit' one child, you cannot change the Trust. All you can do is to stop making gifts to the Trust, leaving it with an insurance policy which lapses due to nonpayment of premiums.
Of course, the major reason to have a Life Insurance Trust is to avoid the risk of ownership by another person, and to ensure that the beneficiaries do not receive substantial assets until they are mature enough to handle them.
Adult Children as Owners: Of course, if your children are mature and stable, they may be the owners personally, paying premiums with money you give them. However, a Trust could provide them with the asset protection they need.
Conclusion: Bethenny Frankel should know (or her lawyers) that the best method of owning insurance is in a Life Insurance Trust.
Questions? Call Mintco Financial Team. We are specialists in Estate Planning and our Team has been saved millions of Dollars in Taxes to our clients.
www.MintcoFinancial.com
Phone: 813-964-7100
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