If I’m in debt and die, can my creditors seek repayment from the death benefit payable to my family? Can they put a lien against my life insurance?
Total Comments: 4
Posted: Fri Jun 26, 2009 12:25 pm Post Subject:
No.
Posted: Fri Jun 26, 2009 12:52 pm Post Subject:
The life insurance proceeds will be paid directly to your beneficiary. However, if you do not have a specific beneficiary...the proceeds will be paid to your estate. Your creditors are allowed to seek repayment of debts from your estate.
Also be advised that if your life insurance proceeds are being paid directly to your surviving spouse, and the spouse is joint on any of the debts...there could be issues regarding personal judgments, etc.
Your best course of action is to name specific beneficiaries, so as to avoid probate and estate settling. No liens can be placed against the insurance policy with the exception of a loan repayment to the insurance company. If you have borrowed against the insurance policy, then the death benefit will be reduced by that amount.
Posted: Mon Jun 29, 2009 08:27 am Post Subject:
Hi All,
I'm residing in the state of Texas which is a community property state. Would that make a difference in disbursement of life insurance benefit in case of unpaid debts of the spouse?
Posted: Tue Jun 30, 2009 12:42 am Post Subject:
The life insurance proceeds will still be paid directly to the named beneficiaries. It would be very difficult for any creditors to freeze the assets, especially being the fact that the creditors should not be aware of said policies.
The only way I can imagine that any creditors may get ahold of the money is if you deposited the money into your account, and due to a judgment or lien the account was frozen by a court order. Even this would probably be a stretch!
Posted: Fri Jun 26, 2009 12:25 pm Post Subject:
No.
Posted: Fri Jun 26, 2009 12:52 pm Post Subject:
The life insurance proceeds will be paid directly to your beneficiary. However, if you do not have a specific beneficiary...the proceeds will be paid to your estate. Your creditors are allowed to seek repayment of debts from your estate.
Also be advised that if your life insurance proceeds are being paid directly to your surviving spouse, and the spouse is joint on any of the debts...there could be issues regarding personal judgments, etc.
Your best course of action is to name specific beneficiaries, so as to avoid probate and estate settling. No liens can be placed against the insurance policy with the exception of a loan repayment to the insurance company. If you have borrowed against the insurance policy, then the death benefit will be reduced by that amount.
Posted: Mon Jun 29, 2009 08:27 am Post Subject:
Hi All,
I'm residing in the state of Texas which is a community property state. Would that make a difference in disbursement of life insurance benefit in case of unpaid debts of the spouse?
Posted: Tue Jun 30, 2009 12:42 am Post Subject:
The life insurance proceeds will still be paid directly to the named beneficiaries. It would be very difficult for any creditors to freeze the assets, especially being the fact that the creditors should not be aware of said policies.
The only way I can imagine that any creditors may get ahold of the money is if you deposited the money into your account, and due to a judgment or lien the account was frozen by a court order. Even this would probably be a stretch!
Add your comment