Question on Ex asking to stay on my life insurance policy

[panchocisco]

More of a moral question or a "has anyone experienced this" question. Going thru a divorce and my soon to be ex wants me to keep her as the beneficiary. Details below.

- We have an 8 y/o kid.

- Ex makes $138K a year, I make $111K.

- Current LI policy is $400K which I don't intend to keep post divorce.

- I have $330K in stocks/IRA/savings that would go to our kid, managed by my father.

- Neither of us have debt or a mortgage.

Ex is adament I keep my life insurance policy with her as the beneficiary. I disagree. Even if I were to keep a policy, I wouldn't have her as the beneficiary (long history about her spending money on herself and not our family).

Is it normal for the higher earner to want this? Am I being stubborn?

Thanks...

 

[raymondg]

@panchocisco Is she trying to do something to you ? It's not a huge policy. Set your parents as beneficiaries. Or better yet create a trust and set the beneficiary as the trust. The trust should benefit your kid and hold the money for him until 18.

Don't cancel a existing cheap policy. You never know what will happen in future and u may not get reinsured

 

[panchocisco]

@raymondg I've joked with my friends about that. Told them, "in case something happens to me, you'll know...".

 

[defd2000]

@panchocisco It's also advisable not to make any insurance changes until after the divorce is finalized. Divorce decrees might require you to keep the policy until your child reaches a certain age.

However, speedway has great advice regarding the trust. The ex won't be able to touch it.

 

[jwalk33]

@panchocisco Often I’ve seen a requirement to maintain life insurance after a divorce when minor children are involved. Other than that it’s up to you.

 

[learningasigo]

@jwalk33 Cookingfor6 is right here.
Most divorce proceedings mandate keeping life insurance in force for the other. The good news here is that your ex will then need to take out coverage and list you as the beneficiary.

Something that struct me about your post, your $330k in equities, IRA, etc is like going to get cut in half. They are entitled to half of that particularly the qualified money (IRA).
Here is a little helpful piece on QDROs:

https://www.investopedia.com/personal-finance/whats-qdro/

 

[tabinek]

@panchocisco Keep it for your kid - at least until they are an adult or thru college. Even though your ex-wife wouldn’t be destitute without your income. That would be a nice college fund for your kid or a serious down payment for their first house.

 

[txpete]

@panchocisco Just a thought. You could have your assume payments for the policy in return for being the beneficiary. (Since you don’t want the policy anymore.) I think it is normal to me. You are both still raising the kid and still reliant on the others income to pay for expenses which will still be ongoing for minimum 10 or more years. Just because you are divorced does not change that you had a kid together which is a mutual responsibility and cost.

 

[beaud20]

@panchocisco Ask her why? And if you get a BS answer, keep probing for why. Your instincts are probably correct. Use the 5 why's.

 

[frenchyriff]

@panchocisco Set up a trust for your child, keep the policy if it's cheap. You never know what the future holds... I would not name your Ex as a bene unless it is court mandated...

 

[runningwithraven]

@panchocisco NO you NOT being stubborn. She do NOT have to be a beneficiary ESPECIALLY when you mentioned her long history. Trust is a fantastic idea so she cant try or attempt to fight for it. If you dont want to do a trust then just leave her on it. Also dont have to tell if you are or not. To keep her calm, just let her know you dont know or you still thinking about, its still in consideration or whatever you feel to keep her at bay.

 

[magic123]

@panchocisco One option is to transfer ownership of the policy to her then she is responsible for paying the premiums.