by gnjthelaws2000 » Tue Nov 02, 2010 03:49 pm
My husbands life insurance policy was written in New York. He passed recently and we live in AZ. HE HAD SEVERAL OUTSTANDING DEBTS. I am not on these accounts and never have been. Can the creditors get the proceeds. I have cashed one check and the other one has not been cashed, nor do I plan on placing them in an account anywhere. Can the creditors get this money.
Posted: Wed Nov 03, 2010 01:20 am Post Subject:
My husbands life insurance policy was written in New York. . . . Can the creditors get the proceeds?
Not one iota if the money is payable to a named beneficiary.
And they cannot get it from the beneficiary, either.
Cash/deposit the checks and use them as you see fit. It's your money and no one else's.
Posted: Thu Nov 04, 2010 01:19 am Post Subject:
While they don't have access to the life insurance benefit directly, if the debts were incurred while married and living in AZ, you might still be liable for them. Whether or not your name is on the account is irrelevant, in community property states you can be considered a party to the debt if incurred during your marriage while living in that state. There are ways to try and get out of this, like proving that the debts incurred did not benefit the "community" i.e. you.
Posted: Thu Nov 04, 2010 03:39 am Post Subject:
in community property states you can be considered a party to the debt if incurred during your marriage while living in that state.
California is a community property state, but also allows married persons to obtain credit in their own names, which does not obligate their spouse to the debt. Separate debt goes to the grave with the debtor when he/she dies.
Regardless, whether a person is obligated to a debt or not, the life insurance proceeds are untouchable until they are in someone's hands. For a creditor to get its hands on the money now in the hands of a beneficiary, they would first have to obtain a judgment through a civil suit.
Of course, they can write letters demanding payment, make phone calls within the confines of the Fair Debt Collection Practices Act, and try to intimidate a person into accepting liability for a debt they have no true responsibility for. But they can't just come knocking and collecting, garnishing wages, attaching bank accounts or any other such thing without the judgment in hand.
And if sued, look in your credit contract for an ARBITRATION clause. If it's there, demand arbitration instead of defending the civil action (although you have to answer the complaint to avoid a default judgment -- but you demand arbitration in your ANSWER filing). Many creditors will refuse to arbitrate, in which case the debt becomes uncollectible if they don't.
Posted: Thu Nov 04, 2010 04:01 am Post Subject: how would they find out if there was life insurance proceeds
I thought htere was laws governing disclosure of life insurance proceeds. How would they find out?
Posted: Thu Nov 04, 2010 05:34 am Post Subject:
There are no special laws concerning disclosure of life insurance proceeds. But when a person dies INTESTATE (without a will) and there is no named beneficiary, the proceeds are paid to the owner of the policy. Since more than 90% of all individual life insurance is owned by the insured, that means in such a case the death benefits will be paid to the estate of the deceased owner. Probate is a VERY PUBLIC process, and all of a person's assets are laid bare for all to see, including the creditors of the decedent. Life insurance proceeds will be listed as one of the assets.
Anyone with a legitimate claim against the estate of the decedent may file their claim with the probate court, which will attempt to satisfy all valid claims before any money/property can be transferred to heirs.
Posted: Thu Nov 04, 2010 06:12 am Post Subject: Will
There is a will and several named primary beneficiaries.
Posted: Thu Nov 04, 2010 02:27 pm Post Subject:
When life insurance is the question, the WILL is meaningless. Wills have no say in how life insurance money is paid -- unless there is no beneficiary on the policy. Life insurance beneficiaries cannot be named in a will, but must be established in writing with the insurance company prior to the death of the insured.
If there are no named beneficiaries on the policy, in most cases, the money goes into the decedent's estate, where it is subject first to the claims of creditors. After that, the money may be parceled out by the probate court according to the will, or according to state law if there is no will.
Posted: Fri Nov 05, 2010 03:09 am Post Subject:
What kind of life insurance policy are we talking about?
Who is the named beneficiary?
The answer to the first question isn't nearly as important as the answer to the second. But I can't begin to tell you the number of situations I've run into in the last couple of weeks concerning people with group policies and no named beneficiary b/c they or HR never took a look at it.
Posted: Fri Nov 05, 2010 05:46 pm Post Subject:
BNTRS raises an important point. Are we talking about individual life insurance or a group policy?
Group life policies commonly insert a "Facility of Payment" provision that allows the insurer to pay first to a spouse, then to persons according to "per stirpes" (following probate law) when there is no named beneficiary. This provision avoids the automatic payment of proceeds to the decedent's estate, as described above.
Posted: Fri Nov 05, 2010 10:40 pm Post Subject: Beneficiary
I am the beneficiary along with several others. There is a will leaving everything to me. Not that there was much to leave. The life insurance policy was a group pollicy. That matter is resolved.
My question is can creditors claim any of the proceeds. I am planning on purchasing a home in another state and didn't want a lien or judgement placed on the home. There is a debt owed to the IRS that is being taken care of currently.
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