Life Insurance Proceeds and Creditor Claims

Are life insurance proceeds subject to the claims of the decedent’s creditors under Tennessee law? Consider two scenarios.

Read More »

Tags: , , , , , ,

Health Insurance and Gift Tax

Are payments of health insurance premiums for a child, grandchild, or other party subject to federal gift? No, provided the payment is made correctly. I.R.C. § 2503(e)(2) excludes from gift tax any amount paid on behalf of an individual: (A) as tuition to an educational organization described in section 170(b)(1)(A)(ii) for the education or training of such individual, or (B) to any person who provides medical care (as defined in section 213(d)) with respect to such individual as payment for such medical care. For this purpose, medical care is defined under Section 213(d) as amounts paid for: for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body, […]

Read More »

Tags: , , ,

2017 Probate Omnibus Bill: What’s Missing?

The 2017 probate omnibus bill is notable not just for what it contains, but also for what it does not contain. The original version of the bill was HB 0567. It contained several sections that addressed the effect of divorce or annulment on an estate plan. Under current law, divorce/annulment, by itself and without any further action of the testator revokes any disposition or appointment of property made by the will to the former spouse, any provision conferring a general or special power of appointment on the former spouse, and any nomination of the former spouse as executor, trustee, conservator or guardian, unless the will expressly provides otherwise. Similarly, a decree of annulment, divorce, dissolution of marriage, or legal separation revokes […]

Read More »

Tags: , , , , , , , , ,

Forget Intent, It’s the Beneficiary Designation that Controls

Another case reiterates the primacy of beneficiary designations over other evidence of a decedent’s intent. The situation is tragic, but the result is wholly predictable. Wife and Husband were the parents of a 12 year old Son when they were both diagnosed with terminal cancer. Although Wife was diagnosed first, Husband was not expected to outlive her. Wife, however, died first. Son was 16 at the time. Wife was the owner and insured under a $600,000 life insurance policy. She initially named Husband as beneficiary. When Husband went to collect the insurance proceeds, he discovered that Wife had changed the beneficiary designation shortly before her death. The actual beneficiaries were Husband (50%) and Wife’s Sister (50%). Why Wife left half the proceeds […]

Read More »

Tags: , , , ,