Mother in Law's life insurance

[JaneDil]

Yes, it's her money and she can burn it if she wants.
But she shouldn't pretend to the kids and grandkids that they will inherit some huge sum of money
if it's likely there will be nothing left (possibly debt).

Plus, she's only 62. She could easily live another 30 years. It sounds like she'll likely need to ask
her children to help her out at this rate. Not cool, especially since with proper planning and wise
spending, she could live a comfortable life and not be a burden on her kids (who likely are worried
about paying their own mortgage and saving for their kids' university, etc.).

Also - let's not forget that a good chunk of this money once belonged to the FIL. I wonder what
he would think of his wife plowing through it.

My own mother made it very clear that she wants her half to go to the kids and grandkids if she
happens to die first. My father can burn the other half if he wants - but not the entire sum.

Sounds like MIL is being stubborn. She won't even allow her kids to look over the policy.
At the very least, she should agree to consult with a lawyer so that she fully understands the policy.

[omro]

At the very least, she should agree to consult with a lawyer so that she fully understands the policy.

I agree with you on this 100%

[Wing Nut]

[QUOTE=JaneDil;16208711].......Personally, I couldn't enjoy myself on multiple lavish vacations each year if I knew my children could use help
with their mortgage or repairing a roof, etc.

I would be happier giving my kids a vacation than taking one myself (especially after the third or fourth trip).
But hey, that's me........
[QUOTE]

Want to adopt me?

You sound like an awesome parent.

[alkizmo]

Typical life insurance on mortgages AND HELOCs end at 70.
At 70, she'll get a letter saying that the insurance is OVER.
She's only paying a premium over her balance month by month, to cover the balance of the HELOC.

That's what life insurances over HELOCS & mortgages are. They aren't life insurance policies.

[brunes]

Y
Sounds like MIL is being stubborn. She won't even allow her kids to look over the policy.
At the very least, she should agree to consult with a lawyer so that she fully understands the policy.

Her kids frankly have no right to look over the policy. It's her money she can do with it what she wants. Her kids should expect an inheritance of exactly ZERO, and anything above this is a bonus.

It never ceases to amaze me the sense of entitlement some people have toward their parents things as they age. Guess what, I hope my parents mortgage their house to the hilt and spend their time enjoying every last second of life. They worked hard for their money and they have the right to enjoy it. I don't want ANY of it.

[JaneDil]

In our family, we're just not secretive about money.

I actually have zero sense of entitlement.

We have tried to get our parents to go on a vacation because they haven't been in years.
Instead, they choose to spend their money helping out the kids and grandkids. Not surprised
though - they've always been incredibly selfless people. They were like that when we were
kids and they're still the same way. And I'm the same way towards my own children.

I would be thrilled if my parents would go on the occasional trip. But they just choose not to.

MIL and FIL, on the other hand, spend about half the year traveling. They blow more money
on vacations than the average Canadian earns in a single year. Again, their money and their
choice.

But there's also a reason the grandkids barely recognize them...

[alkizmo]

Her kids frankly have no right to look over the policy. It's her money she can do with it what she wants. Her kids should expect an inheritance of exactly ZERO, and anything above this is a bonus.

If the MIL never said anything about insurances, then ya, the kids shouldn't be prodding around as to what she has.
However in this case she's claiming to her kids that she has a life insurance on her HELOC and that they'll get a debt free home as inheritance. At this point the kids are only being responsible at to verifying that their mother isn't mistaken.

[jedi1648]

Her kids frankly have no right to look over the policy. It's her money she can do with it what she wants. Her kids should expect an inheritance of exactly ZERO, and anything above this is a bonus.

It never ceases to amaze me the sense of entitlement some people have toward their parents things as they age. Guess what, I hope my parents mortgage their house to the hilt and spend their time enjoying every last second of life. They worked hard for their money and they have the right to enjoy it. I don't want ANY of it.

I cannot agree more. It is her house, debt and money, and she can do whatever she wants. Instead of a line of credit and insurance, she may do like some other folks do by taking a reverse mortgage. She should spend some or all money and enjoy life while she can - eating out, cruises, nice big HDTV, etc. In many cases, the parents' house is sold and divided up among the children, instead of keep it because the children already have a house, and therefore, money from the house appears to be the issue. When there is a WILL (with assets and money), there are always relatives. My chidlren were shocked when I told them that I intend to donate my house to a charity, and I said that so that they should work hard to make their own fortune, and dont aim at the inheritance. I already paid for their university education and european travels upon graduation, and it is about time that they become financially independent instead of putting their noses into my financial affairs.

[JaneDil]

jedi1648 - And what happens when MIL is broke in ten or twenty years? Do you think MIL will quietly move into a government nursing home, where she needs to share a room with three other patients?

Or do you think she'll be crying to her kids, asking them to help her out?

You're right - it's her money (although some of it can be considered FIL's money and I'm not sure - and neither are you - whether he was hoping his money would get passed on to kids and grandkids or blown on dozens of cruises). In any event, MIL should try to spend and plan wisely so that she will have enough money to sustain herself for the next thirty years (at this rate, that doesn't seem likely).

I agree with you though - we plan to tell our kids that we will be leaving our money to charity. We just don't want them to count on an inheritance - and that way, if there is some money at the end, they will be pleasantly surprised. But we will also be careful with our money and not blow it on frivolous things just because we can. I would be much happier in my grave knowing that my kids were finally able to pay off their mortgage - or take their own European vacation - rather than going on my third or fourth around the world.

[Beachdown]

jedi1648 - And what happens when MIL is broke in ten or twenty years? Do you think MIL will quietly move into a government nursing home, where she needs to share a room with three other patients?

Or do you think she'll be crying to her kids, asking them to help her out?

You're right - it's her money (although some of it can be considered FIL's money and I'm not sure - and neither are you - whether he was hoping his money would get passed on to kids and grandkids or blown on dozens of cruises). In any event, MIL should try to spend and plan wisely so that she will have enough money to sustain herself for the next thirty years (at this rate, that doesn't seem likely).

Op said she has a pension. I highly doubt she'll be broke however it's impossible to say without more information.

It doeasn't matter what FILs intentions were. He's dead and willed his estate to OPs MIL. If he wanted her to spend it on the kids, he could've made provisions in his will.

OP should stop worrying about what she's saying and tell all involved not to listen or expect any inheritance.

This is what i tell my mother - spend it all and bounce the last cheque.

[JaneDil]

The problem is, none of us know exactly when we're going to die.

If OP's MIL has a pension and investments, yet still finds it necessary to have a line of credit against her house,
then I think she has a spending problem. Yes, it's her money...but I hope she's able to figure out a way to live
off that money in the event she's still around in 20 or 30 years (which is quite likely, given her young age).

Personally, I will either make sure that my share of the money goes directly to my kids and grandkids if I die before hubby.
And really, I would try to gift the money away to my kids and grandkids as much as possible in the years leading up to my death,
so that the gov't doesn't get their hands on it.

I would also be upset if hubby decided to marry some 20 year old bimbo who was only after him for his money.
Yes, he can do that with his half of the money and leave it all to her once he's dead.
But she's not going to get my share of the money...that's something I want to go to help out my kids or grandkids.
(Unlikely scenario since hubby doesn't appear to be attracted to 20 year old gold diggers anyway...but who knows what his state of mind will be when he's 70 years old...)

[JaneDil]

By the way, none of this really matters.

OP's MIL can do what she wants with the money.

The issue here is to make sure that OP's MIL understands what her policy is all about, what it will give to her
and what the limitations are. She doesn't need to allow her kids to look over the policy, but if she refuses to
even allow her lawyer to look it over, she's just being stubborn for no good reason.

Better to be informed than sorry.

[Cech]

I can't understand how the OP expects any justification for their concern. This will without a doubt break up the family, and the MIL is still alive.

Unfortunately, I have been through this, and even after a equal distribution through my mother's will, we are still battling to this day. The worst thing to do is have the son-in-laws and daughter-in-laws involved, you really need to stay out of it. Just live your lives without any expectations, let her enjoy her time with her family and as well by herself, but I can see from your (OP) comments, it might be too late.


.

[omro]

I can't understand how the OP expects any justification for their concern. This will without a doubt break up the family, and the MIL is still alive.

As I've said before, she has told her children that they can expect to inherit the house, clear of debt, as her insurance will pay off the line of credit upon her death. She is 100% adamant that this is the case. So she is potentially raising false expectations.

I have told my husband, that depending upon her type of insurance, based on what I've read here, he can expect:
- her to stop having insurance coverage at a certain age, if term insurance.
- to perhaps have coverage, but potentially not all coverage when she dies, if she has set up a whole life policy.

I have told him that if the latter, since she set it up so late in life, the premiums may be very high and she may be wasting her money.

He is not happy about potentially losing his family home upon her death, if her debt remains as high as it is or increases and there isn't enough insurance to cover it.

I think it's a little melodramatic to assume that this will break the family up, at this stage or even in the future.

I would have assumed that insurance companies had tons of contingencies in place to make sure that elderly customers didn't wrack up huge amounts of debt against their home and then just die and expect them to clear it for the next generation.

My original purpose for posting was to determine whether her claims of being insured up to her death, even if that were in her 90s and through natural causes, could even be plausible. The conclusion that I've come to is, it's highly unlikely that she is covered as well as she thinks she is. Term life will end at a certain age, probably at most 80. Whole life insurance, started in her late 50s, may be so expensive that it might have been better to concentrate on simply paying off the debt and probably won't pay all her debt off.

If she won't let anyone see her policy, then the best thing to do would be to assume that to keep the house, everyone had better start saving towards that goal.

[wesboag]

As I've said before, she has told her children that they can expect to inherit the house, clear of debt, as her insurance will pay off the line of credit upon her death. She is 100% adamant that this is the case. So she is potentially raising false expectations.

I have told my husband, that depending upon her type of insurance, based on what I've read here, he can expect:
- her to stop having insurance coverage at a certain age, if term insurance.
- to perhaps have coverage, but potentially not all coverage when she dies, if she has set up a whole life policy.

I have told him that if the latter, since she set it up so late in life, the premiums may be very high and she may be wasting her money.

He is not happy about potentially losing his family home upon her death, if her debt remains as high as it is or increases and there isn't enough insurance to cover it.

I think it's a little melodramatic to assume that this will break the family up, at this stage or even in the future.

I would have assumed that insurance companies had tons of contingencies in place to make sure that elderly customers didn't wrack up huge amounts of debt against their home and then just die and expect them to clear it for the next generation.

My original purpose for posting was to determine whether her claims of being insured up to her death, even if that were in her 90s and through natural causes, could even be plausible. The conclusion that I've come to is, it's highly unlikely that she is covered as well as she thinks she is. Term life will end at a certain age, probably at most 80. Whole life insurance, started in her late 50s, may be so expensive that it might have been better to concentrate on simply paying off the debt and probably won't pay all her debt off.

If she won't let anyone see her policy, then the best thing to do would be to assume that to keep the house, everyone had better start saving towards that goal.

It is very plausible that she has enough coverage to cover the $300,000 LOC on her home if in fact it is an "independent" insurance contract and not the stuff you get at the bank, via attachment to her mortgage/HELOC. If she took the policy out at 56, or whatever, it can still be affordable, as $300,000 of coverage is not outlandish by any means depending on the way it is set up.

Have you and your siblings considered taking out a life insurance policy on your mother (given her permission) in order to fund the tax liability upon her eventual death? It’s a common practice in estate planning, but not so common with the general public’s understanding of shifting tax liability. She’s still young enough that it will be affordable as a joint expense by you and your siblings.

This way you can all split the premium and guarantee this negative outcome does not come to fruition.

I see this concern almost daily as a financial planner. Having these sort of discussion with parents is sometimes uneasy, but it’s important. That said, if you want to know about the policy have an insurance specialist or someone qualified to look at it. A lawyer will have limited knowledge on how these policies work.