Ex wants to use me for Joint and Survivor Annuity to forward to kids

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lovedmyjob
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Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by lovedmyjob » Wed Jul 11, 2018 9:36 am

Has anyone ever done this? My single ex wants to retire using me as his Joint and Survivor option in the WRS with the expectation that I forward the proceeds after taxes to our kids rather than use the 180 Payments Guaranteed option. I can't wrap my head around the possible ramifications of doing this. I would need software that calculates the affect on my income as well as the increased income due to his annuity. Just wondering if there are others out there that have been in this situation. I think I prefer that he use the 180 Payments Guaranteed option rather than mess with this. Thoughts?

Dottie57
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by Dottie57 » Wed Jul 11, 2018 3:20 pm

Isn’t the joint option for a spouse? You need to know the legality of this.

delamer
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by delamer » Wed Jul 11, 2018 3:28 pm

Follow your instincts, and tell him no.

Not only are there ramifications for your taxes, what about if you needed to qualify for Medicaid or some other income-based social service down the line?

Not to mention that if he outlives you, then his plan backfires.

Silk McCue
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by Silk McCue » Wed Jul 11, 2018 3:28 pm

Did your divorce decree specify how this pension would be handled? It could have been decreed that you would/could be a joint annuitant.

https://www.divorceny.com/e-d/mandating ... divorce-2/

Cheers

delamer
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by delamer » Wed Jul 11, 2018 3:30 pm

Silk McCue wrote:
Wed Jul 11, 2018 3:28 pm
Did your divorce decree specify how this pension would be handled? It could have been decreed that you would/could be a joint annuitant.

https://www.divorceny.com/e-d/mandating ... divorce-2/

Cheers
Then why would the ex be asking her permission?

Silk McCue
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by Silk McCue » Wed Jul 11, 2018 3:32 pm

delamer wrote:
Wed Jul 11, 2018 3:30 pm
Silk McCue wrote:
Wed Jul 11, 2018 3:28 pm
Did your divorce decree specify how this pension would be handled? It could have been decreed that you would/could be a joint annuitant.

https://www.divorceny.com/e-d/mandating ... divorce-2/

Cheers
Then why would the ex be asking her permission?
I have no idea why he would ask and don't want to presume. If it was court ordered then she herself has rights to the money. Best not to make any assumptions when exploring an issue.

Cheers

NotWhoYouThink
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by NotWhoYouThink » Wed Jul 11, 2018 3:43 pm

I thought the whole point of having an Ex is that you no longer have to respond to his half-baked schemes.

bltn
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by bltn » Wed Jul 11, 2018 5:07 pm

NotWhoYouThink wrote:
Wed Jul 11, 2018 3:43 pm
I thought the whole point of having an Ex is that you no longer have to respond to his half-baked schemes.
Good observation!!

Nate79
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by Nate79 » Wed Jul 11, 2018 5:13 pm

I'm not seeing the negative here unless you hate your kids.... Why not just say ok and any tax impact at the time you will take out of the money. You can gift the money to the kids every year as you wish. Sounds like he is wanting to do something nice for the kids and will be taking an income hit to do so as the annuity payout is less with joint option than no joint option.

DesertDiva
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by DesertDiva » Wed Jul 11, 2018 5:19 pm

delamer wrote:
Wed Jul 11, 2018 3:30 pm
Silk McCue wrote:
Wed Jul 11, 2018 3:28 pm
Did your divorce decree specify how this pension would be handled? It could have been decreed that you would/could be a joint annuitant.

https://www.divorceny.com/e-d/mandating ... divorce-2/

Cheers
Then why would the ex be asking her permission?
It sounds like he wants his pension to go to his kids and that's one way to potentially do it. But as noted, parents are not married, and only a spouse can collect on the Joint and Survivor option (as I understand it), unless possibly there is a court order (i.e., QDRO).
lovedmyjob wrote:
Wed Jul 11, 2018 9:36 am
I can't wrap my head around the possible ramifications of doing this...
I think I prefer that he use the 180 Payments Guaranteed option rather than mess with this...
This isn't your problem to solve and you shouldn't be expected to shoulder the additional tax burden. Suggest to him that he contact an estate planning attorney to arrange his affairs.
lovedmyjob wrote:
Wed Jul 11, 2018 9:36 am
Ex wants to use me...
Yep... :?
Last edited by DesertDiva on Wed Jul 11, 2018 5:22 pm, edited 1 time in total.

PoppyA
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by PoppyA » Wed Jul 11, 2018 5:20 pm

He can’t just name them in equal parts?
"La Bella Luna"

Whakamole
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by Whakamole » Wed Jul 11, 2018 5:26 pm

DesertDiva wrote:
Wed Jul 11, 2018 5:19 pm
It sounds like he wants his pension to go to his kids and that's one way to potentially do it. But as noted, parents are not married, and only a spouse can collect on the Joint and Survivor option (as I understand it), unless possibly there is a court order (i.e., QDRO).
Maybe he's thinking the upside is that his pension doesn't catch on and their kids can get extra cash. The downside is that may be fraud, but the ex will be long dead by the time the pension figures it out so someone else ends up having to pay fines/go to jail.

Silk McCue
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by Silk McCue » Wed Jul 11, 2018 5:31 pm

PoppyA wrote:
Wed Jul 11, 2018 5:20 pm
He can’t just name them in equal parts?
Annuitized Pensions don’t work that way.

Cheers

Silk McCue
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by Silk McCue » Wed Jul 11, 2018 5:35 pm

Whakamole wrote:
Wed Jul 11, 2018 5:26 pm
DesertDiva wrote:
Wed Jul 11, 2018 5:19 pm
It sounds like he wants his pension to go to his kids and that's one way to potentially do it. But as noted, parents are not married, and only a spouse can collect on the Joint and Survivor option (as I understand it), unless possibly there is a court order (i.e., QDRO).
Maybe he's thinking the upside is that his pension doesn't catch on and their kids can get extra cash. The downside is that may be fraud, but the ex will be long dead by the time the pension figures it out so someone else ends up having to pay fines/go to jail.
If the employer allows the ex-wife to be a joint life annuitant it is perfectly legal. What she does after her spouse dies is completely up to her and she can gift those funds to the children. There is nothing improper about such an agreement.

Cheers

ConcernedKid
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by ConcernedKid » Wed Jul 11, 2018 5:36 pm

Is he dating anyone? This can get messy if he gets married in the future. Some states have invalidated beneficiaries who are ex-spouses. I suppose this is less of an issue if you are already an ex-spouse at the time.

AlwaysWannaLearn
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by AlwaysWannaLearn » Wed Jul 11, 2018 5:40 pm

.....
Last edited by AlwaysWannaLearn on Wed Jul 18, 2018 10:08 pm, edited 1 time in total.

DesertDiva
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by DesertDiva » Wed Jul 11, 2018 5:46 pm

Silk McCue wrote:
Wed Jul 11, 2018 5:35 pm
Whakamole wrote:
Wed Jul 11, 2018 5:26 pm
DesertDiva wrote:
Wed Jul 11, 2018 5:19 pm
It sounds like he wants his pension to go to his kids and that's one way to potentially do it. But as noted, parents are not married, and only a spouse can collect on the Joint and Survivor option (as I understand it), unless possibly there is a court order (i.e., QDRO).
Maybe he's thinking the upside is that his pension doesn't catch on and their kids can get extra cash. The downside is that may be fraud, but the ex will be long dead by the time the pension figures it out so someone else ends up having to pay fines/go to jail.
If the employer allows the ex-wife to be a joint life annuitant it is perfectly legal. What she does after her spouse dies is completely up to her and she can gift those funds to the children. There is nothing improper about such an agreement.

Cheers
And if the employer doesn't allow it... at any rate, he should be talking to his HR department to see if they allow for a beneficiary, or a non-spouse survivor to collect on a pension and also talk to an estate planning attorney. This needs to be his responsibility.

Silk McCue
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by Silk McCue » Wed Jul 11, 2018 5:55 pm

The OP’s ex should take the monthly net after tax difference between the Sole Annuitant and the Joint Annuitant plan he would take with the OP and see how much Term Insurance he can qualify for, and afford, for 15 - 30 years and buy it with his children as his beneficiaries. Whole Life is an option in these approaches but probably too expensive with less face value than he would want.

That way the OP is off the hook, the husband gets what he would have gotten with a joint annuitant and the kids “may” get a payout depending on the policy term selected.

Cheers

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F150HD
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by F150HD » Wed Jul 11, 2018 6:24 pm

NotWhoYouThink wrote:
Wed Jul 11, 2018 3:43 pm
I thought the whole point of having an Ex is that you no longer have to respond to his half-baked schemes.
Respond twice, and half baked becomes 'baked', so its all good. :wink:

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VictoriaF
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by VictoriaF » Wed Jul 11, 2018 6:26 pm

F150HD wrote:
Wed Jul 11, 2018 6:24 pm
NotWhoYouThink wrote:
Wed Jul 11, 2018 3:43 pm
I thought the whole point of having an Ex is that you no longer have to respond to his half-baked schemes.
Respond twice, and half baked becomes 'baked', so its all good. :wink:
... and if you don't respond, it's raw.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

JoeRetire
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by JoeRetire » Wed Jul 11, 2018 6:34 pm

lovedmyjob wrote:
Wed Jul 11, 2018 9:36 am
Has anyone ever done this? My single ex wants to retire using me as his Joint and Survivor option in the WRS with the expectation that I forward the proceeds after taxes to our kids rather than use the 180 Payments Guaranteed option.
Not a good idea to get in the middle of this and may not be allowed depending on the terms of the Annuity. If the Annuity allows anyone to be named as beneficial Survivor suggest to your ex to choose one of your kids and keep you out of it.

Or, have your ex select a Single Life Annuity and use the difference between the Single Life and Joint and Survivor amounts to pay for term life insurance naming the kids as beneficiaries.

Don't get in the middle of a scheme with your ex.
I can't wrap my head around the possible ramifications of doing this.
Because you don't know what you don't know. To me, that's a sign not to get involved.

If you feel compelled to examine this further, have your ex pay for a few hours of a fee-only fiduciary financial adviser's time to explain all the ramifications so that you can make an intelligent decision.

windrose
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by windrose » Wed Jul 11, 2018 7:29 pm

PoppyA wrote:
Wed Jul 11, 2018 5:20 pm
He can’t just name them in equal parts?
I have a pension that allows me to name anyone as a beneficiary (including anyone posting on this thread!) , but it can only be one person. Also, the age of the beneficiary determines the hit my pension will take vs. the single life annuity. The younger the person, the bigger the hit. I don't think I need anyone's written permission to do this, just like I would not need it to leave someone property or my 401K, but i would need their social security number. You might be able to legally refuse it if/when it happened, but I'm not sure.

My employer has frozen our pensions, basically because *they could*--and there was nothing we could do about it. As a single person without kids, I have entertained the idea of naming a beneficiary because *I can*. When the time comes, I will run the numbers and see how it looks, but I like the idea that my frozen pension could live on and on. Your ex may feel the same about his, especially if he has worked at his company for a long time. That pension dies with him otherwise.

While I can see the potential downsides of having a taxable income for life that is (per my word of honor) not for my use, I think the potential for building a nice nest egg for the kids would outweigh the negatives. As noted, if he were to get married before he starts taking the pension, his new spouse would have to sign off on this (ERISA laws), but that would be his problem. Worse case scenario would be the new spouse would refuse, then the whole thing is off.

delamer
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by delamer » Wed Jul 11, 2018 7:52 pm

Silk McCue wrote:
Wed Jul 11, 2018 3:32 pm
delamer wrote:
Wed Jul 11, 2018 3:30 pm
Silk McCue wrote:
Wed Jul 11, 2018 3:28 pm
Did your divorce decree specify how this pension would be handled? It could have been decreed that you would/could be a joint annuitant.

https://www.divorceny.com/e-d/mandating ... divorce-2/

Cheers
Then why would the ex be asking her permission?
I have no idea why he would ask and don't want to presume. If it was court ordered then she herself has rights to the money. Best not to make any assumptions when exploring an issue.

Cheers
“My single ex wants to retire using me as his Joint and Survivor option in the WRS with the expectation that I forward the proceeds after taxes to our kids rather than use the 180 Payments Guaranteed option.”

If their divorce decree specified that she should get a survivor annuity, the he wouldn’t have the option of the kids getting guaranteed payments instead. She wants him to take the guaranteed option.

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F150HD
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by F150HD » Wed Jul 11, 2018 7:56 pm

VictoriaF wrote:
Wed Jul 11, 2018 6:26 pm
F150HD wrote:
Wed Jul 11, 2018 6:24 pm
NotWhoYouThink wrote:
Wed Jul 11, 2018 3:43 pm
I thought the whole point of having an Ex is that you no longer have to respond to his half-baked schemes.
Respond twice, and half baked becomes 'baked', so its all good. :wink:
... and if you don't respond, it's raw.

Victoria
Looking for the "Like" button..... :happy

lovedmyjob
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by lovedmyjob » Wed Jul 11, 2018 8:14 pm

Dottie57 wrote:
Wed Jul 11, 2018 3:20 pm
Isn’t the joint option for a spouse? You need to know the legality of this.
He is single. We have been divorced for 26 years and I have no rights to this money. It is HIS idea. The Wisconsin Retirement System (WRS) will pay out to him for the rest of his life but will only guarantee 180 payments to our kids. WRS also states that If he names a survivorship beneficiary, that person has to be within 10 years of his age, with the closer to his age the better for maximum payout. A survivorship beneficiary will get his payments if he dies for the rest of their lives rather than for the remaining 180 guaranteed payments. He wants the kids to have the money for the rest of my life if he dies and he trusts I'll give it to them. It sounds like a tax nightmare to me. Thank you for responding but I am looking for someone who has experience with WRS and has done this crazy thing.

lovedmyjob
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by lovedmyjob » Wed Jul 11, 2018 8:15 pm

delamer wrote:
Wed Jul 11, 2018 3:28 pm
Follow your instincts, and tell him no.

Not only are there ramifications for your taxes, what about if you needed to qualify for Medicaid or some other income-based social service down the line?

Not to mention that if he outlives you, then his plan backfires
I totally agree! Thank you!

lovedmyjob
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by lovedmyjob » Wed Jul 11, 2018 8:18 pm

Silk McCue wrote:
Wed Jul 11, 2018 3:28 pm
Did your divorce decree specify how this pension would be handled? It could have been decreed that you would/could be a joint annuitant.

https://www.divorceny.com/e-d/mandating ... divorce-2/

Cheers
No, we've been divorced for 26 years and we settled our pensions long ago. With WRS we can name whomever we want (as long as we aren't married) as a survivorship beneficiary as long as they are within 10 years of our age. Thank you!!

lovedmyjob
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by lovedmyjob » Wed Jul 11, 2018 8:19 pm

AlwaysWannaLearn wrote:
Wed Jul 11, 2018 5:40 pm
lovedmyjob wrote:
Wed Jul 11, 2018 9:36 am
Has anyone ever done this? My single ex wants to retire using me as his Joint and Survivor option in the WRS with the expectation that I forward the proceeds after taxes to our kids rather than use the 180 Payments Guaranteed option. I can't wrap my head around the possible ramifications of doing this. I would need software that calculates the affect on my income as well as the increased income due to his annuity. Just wondering if there are others out there that have been in this situation. I think I prefer that he use the 180 Payments Guaranteed option rather than mess with this. Thoughts?
Agreed. Even if you give ex the benefit of the doubt, as you've noted it raises a lot of questions - legal, financial, taxes, operationally going-forward, etc. that you'd need to research and get answers to (not from him), with no guarantees.

Up to you but if I were in your shoes, I wouldn't waste any more of my precious time and emotional energy on it. Even if he just wants to help his kids, he's dumping work on you. Unless a court requires you to go along with it, I'd thank him for the suggestion and politely decline.
Thank you!

lovedmyjob
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by lovedmyjob » Wed Jul 11, 2018 8:22 pm

Silk McCue wrote:
Wed Jul 11, 2018 5:55 pm
The OP’s ex should take the monthly net after tax difference between the Sole Annuitant and the Joint Annuitant plan he would take with the OP and see how much Term Insurance he can qualify for, and afford, for 15 - 30 years and buy it with his children as his beneficiaries. Whole Life is an option in these approaches but probably too expensive with less face value than he would want.

That way the OP is off the hook, the husband gets what he would have gotten with a joint annuitant and the kids “may” get a payout depending on the policy term selected.

Cheers
Good idea, use the difference to pay for a life insurance policy. I think he's healthy enough to get one. It's about $275 difference per month. He's 61.

lovedmyjob
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by lovedmyjob » Wed Jul 11, 2018 8:27 pm

windrose wrote:
Wed Jul 11, 2018 7:29 pm
PoppyA wrote:
Wed Jul 11, 2018 5:20 pm
He can’t just name them in equal parts?
I have a pension that allows me to name anyone as a beneficiary (including anyone posting on this thread!) , but it can only be one person. Also, the age of the beneficiary determines the hit my pension will take vs. the single life annuity. The younger the person, the bigger the hit. I don't think I need anyone's written permission to do this, just like I would not need it to leave someone property or my 401K, but i would need their social security number. You might be able to legally refuse it if/when it happened, but I'm not sure.

My employer has frozen our pensions, basically because *they could*--and there was nothing we could do about it. As a single person without kids, I have entertained the idea of naming a beneficiary because *I can*. When the time comes, I will run the numbers and see how it looks, but I like the idea that my frozen pension could live on and on. Your ex may feel the same about his, especially if he has worked at his company for a long time. That pension dies with him otherwise.

While I can see the potential downsides of having a taxable income for life that is (per my word of honor) not for my use, I think the potential for building a nice nest egg for the kids would outweigh the negatives. As noted, if he were to get married before he starts taking the pension, his new spouse would have to sign off on this (ERISA laws), but that would be his problem. Worse case scenario would be the new spouse would refuse, then the whole thing is off.
Good points. He's 61 and retiring at the end of the year and hasn't seen anyone since we divorced 26 years ago so I don't believe he'll be getting married. He works for the State of WI and the Wisconsin Retirement System (WRS) will pay out to him for the rest of his life but will only guarantee 180 payments to our kids. WRS also states that If he names a survivorship beneficiary, that person has to be within 10 years of his age, with the closer to his age the better for maximum payout. A survivorship beneficiary will get his payments if he dies for the rest of their lives rather than for the remaining 180 guaranteed payments. He wants the kids to have the money for the rest of my life if he dies and he trusts I'll give it to them, which I would. Thank you for sharing your concern as a single parent.

lovedmyjob
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Joined: Wed Jul 11, 2018 8:49 am

Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by lovedmyjob » Wed Jul 11, 2018 8:30 pm

Nate79 wrote:
Wed Jul 11, 2018 5:13 pm
I'm not seeing the negative here unless you hate your kids.... Why not just say ok and any tax impact at the time you will take out of the money. You can gift the money to the kids every year as you wish. Sounds like he is wanting to do something nice for the kids and will be taking an income hit to do so as the annuity payout is less with joint option than no joint option.
Thank you for your input. I appreciate it. I also believe he has good intentions.

Bacchus01
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by Bacchus01 » Wed Jul 11, 2018 9:00 pm

lovedmyjob wrote:
Wed Jul 11, 2018 8:27 pm
windrose wrote:
Wed Jul 11, 2018 7:29 pm
PoppyA wrote:
Wed Jul 11, 2018 5:20 pm
He can’t just name them in equal parts?
I have a pension that allows me to name anyone as a beneficiary (including anyone posting on this thread!) , but it can only be one person. Also, the age of the beneficiary determines the hit my pension will take vs. the single life annuity. The younger the person, the bigger the hit. I don't think I need anyone's written permission to do this, just like I would not need it to leave someone property or my 401K, but i would need their social security number. You might be able to legally refuse it if/when it happened, but I'm not sure.

My employer has frozen our pensions, basically because *they could*--and there was nothing we could do about it. As a single person without kids, I have entertained the idea of naming a beneficiary because *I can*. When the time comes, I will run the numbers and see how it looks, but I like the idea that my frozen pension could live on and on. Your ex may feel the same about his, especially if he has worked at his company for a long time. That pension dies with him otherwise.

While I can see the potential downsides of having a taxable income for life that is (per my word of honor) not for my use, I think the potential for building a nice nest egg for the kids would outweigh the negatives. As noted, if he were to get married before he starts taking the pension, his new spouse would have to sign off on this (ERISA laws), but that would be his problem. Worse case scenario would be the new spouse would refuse, then the whole thing is off.
Good points. He's 61 and retiring at the end of the year and hasn't seen anyone since we divorced 26 years ago so I don't believe he'll be getting married. He works for the State of WI and the Wisconsin Retirement System (WRS) will pay out to him for the rest of his life but will only guarantee 180 payments to our kids. WRS also states that If he names a survivorship beneficiary, that person has to be within 10 years of his age, with the closer to his age the better for maximum payout. A survivorship beneficiary will get his payments if he dies for the rest of their lives rather than for the remaining 180 guaranteed payments. He wants the kids to have the money for the rest of my life if he dies and he trusts I'll give it to them, which I would. Thank you for sharing your concern as a single parent.
The odds of you living 15+ years beyond his death are what?

windrose
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Re: Ex wants to use me for Joint and Survivor Annuity to forward to kids

Post by windrose » Wed Jul 11, 2018 9:49 pm

lovedmyjob wrote:
Wed Jul 11, 2018 9:36 am
Just wondering if there are others out there that have been in this situation. I think I prefer that he use the 180 Payments Guaranteed option rather than mess with this. Thoughts?
I wanted to add something about the guaranteed option. My pension also has something like this option, but it only applies for 180 payments total, with the clock starting from the first pension payment.

If the retiree dies before the beneficiary, the beneficiary will receive the full amount for the remaining portion of the guaranteed period. If the beneficiary pre-deceases the retiree before the end of the specified period, a new beneficiary can be named. If the retiree is still collecting their pension when the specified time has elapsed, there will is no survivor benefit.

Your ex may have different rules in their plan, maybe someone who is in the Wisconsin system will see this thread and can comment.

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