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If someone dies with 10K in credit card debt and no assets but has life insurance does the credit company get the insurance or does it go to the beneficiary?

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2007-04-04 05:06:54
2007-04-04 05:06:54

Death benefits are generally not subject to attachment for creditor debt. States establish laws concerning property that is exempted from creditor seizure. Without knowing the state of residency it is not possible to be more specific. You can find out what property is exempt under the laws of the state where the person lives by searching "asset exemptions". (Example: Florida asset exemptions). In many states the proceeds of life insurance are not part of the estate because they are proceeds of a contract to pay a third-party beneficiary, which promise of payment vests upon the death of the insured, so the insured (and the estate) do not receive any benefit. Since the estate has no beneficial interest in the proceeds of the insurance, the creditors would have no claim for this money (unless, perhaps, a surviving community property spouse is the beneficiary).

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No. The proceeds will be paid by the insurance company to the named beneficiary. The insurance payoff is not part of the estate so it does not pass under the Will.

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No. they do not. The distribution you make of your personal assets upon your death is none of the insurance company's business, or concern.However, if you wish to change the beneficiary of your life insurance policy - yes - they MUST be notified of that fact, or the proceeds of your life insurance policy may go to someone whom you do not wish to have them.

Yes. Insurance proceeds, unless the beneficiary is the estate, are payable directly to the person who is named as the beneficiary beneficiary. As such, the policy proceeds pass "outside" of the estate and do not become a part of it. If the same person who is the named beneficiary of the policy is also the executor of the estate, he/she is required to carry out the directives of the Will. This includes paying legal debts of the deceased, ensuring protection of the value of the assets of the estate, and distributing the assets as directed in the Will.

Insurance companies have re-insurers to protect their assets.

No. A life insurance policy is a contract and normally has nothing to do with the estate. If there is not a will, the assets will be distributed according to the laws of intestacy in the state in question.

If there is no living beneficiary when the insured dies then payment of proceeds from a life insurance policy would be paid to the estate of the insured. If the insured had a will then the will provides who receives payment of estate assets. If no will is present then state law will provide how and to whom the assets are paid to. If the estate is very large then estate tax could be due on some of the proceeds of the life insurance policy because they become assets of the estate.

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Assets that were owned by the decedent are probate assets. The estate needs to be probated in order for title to pass to the heirs. That property will pass according to the will or according to the laws of intestacy if there is no will.Assets that were owned by survivorship with another person pass directly to the survivor and bypass probate. Those are called non-probate assets. Life insurance with a named beneficiary bypass probate. Bank accounts with a "payable on death" arrangement with the bank pass directly to the beneficiary and bypass probate.Assets that were owned by the decedent are probate assets. The estate needs to be probated in order for title to pass to the heirs. That property will pass according to the will or according to the laws of intestacy if there is no will.Assets that were owned by survivorship with another person pass directly to the survivor and bypass probate. Those are called non-probate assets. Life insurance with a named beneficiary bypass probate. Bank accounts with a "payable on death" arrangement with the bank pass directly to the beneficiary and bypass probate.Assets that were owned by the decedent are probate assets. The estate needs to be probated in order for title to pass to the heirs. That property will pass according to the will or according to the laws of intestacy if there is no will.Assets that were owned by survivorship with another person pass directly to the survivor and bypass probate. Those are called non-probate assets. Life insurance with a named beneficiary bypass probate. Bank accounts with a "payable on death" arrangement with the bank pass directly to the beneficiary and bypass probate.Assets that were owned by the decedent are probate assets. The estate needs to be probated in order for title to pass to the heirs. That property will pass according to the will or according to the laws of intestacy if there is no will.Assets that were owned by survivorship with another person pass directly to the survivor and bypass probate. Those are called non-probate assets. Life insurance with a named beneficiary bypass probate. Bank accounts with a "payable on death" arrangement with the bank pass directly to the beneficiary and bypass probate.

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Generally, no. They are disposed of by their beneficiary designations. An exception would be in the designated beneficiary was a decedent's estate, in which case the assets would pass by the terms of the Will. However, they would not be tangible assets (e.g., furniture, cars, silver, jewelry -- things you can touch). They would be intangible assets. Mutual funds generally do not have beneficiary designations. They might, however, be disposed of in a joint tenancy with right of survivorship or payable on death designation.

If there is a named beneficiary the life insurance proceeds bypass probate and the beneficiary will receive the money. If none is named, the proceeds are paid over to the estate. If the proceeds are paid over to the estate the debts of the decedent must be paid before any assets can be distributed to the heirs.

All insurance companies have re-insurers, to protect their assets and investments. Insurance means spreading the risk to an insurance company, so insurance companies do the same thing - spread their risk to the reinsurers.

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The answer depends on the state of jurisdiction ... in which locale will the decedent's estate be probated? In Ohio, for example (and in most states), courts cannot require that an insurance company make a check payable to anyone but the policy's beneficiary. Since the beneficiary who is not a co-signer of the debt is not responsible for the debt, the creditor will not be able to recover money from insurance proceeds. Keep in mind, however, that any other assets owned by the decedent are available to settle the decedent's just debts, and insurance beneficiaries who also inherit other assets of any value (the gold watch, the baseball card collection) can be forced to liquidate those assets to satisfy the decedent's estate ... and that heir might rather give up some cash received from an insurance policy so he/she can keep dear old dad's gold cuff links.

Well, in practice, I hope you see the problem with this arrangement: by the time it matters who the beneficiary is, the insured is dead. This presents a conundrum. Legally, any property of the deceased ... including, I suppose, life insurance benefits ... would become the property of the deceased's estate, and that would be distributed according to the will and/or relevant law. So it's not an insurmountable problem. It is more often best that the beneficiary be someone other than the insured. Whenever possible, it is best to keep assets out of your estate.

No. The decedent's estate is responsible for paying the debts of the decedent. Generally, an annuity with a named beneficiary is not part of the probate assets much like life insurance payable to a named beneficiary. However, the recipient of an annuity should consult a professional regarding tax issues.

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If the trust is a spendthrift trust, then no, the beneficiary probably cannot borrow against it. It is up to the lender.

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Ordinarily, these are two separate transactions. Consider the following situations: 1. If you have undertaken to make the funeral arrangements and signed a contract with the funeral home to pay for them, you have committed to pay from all available funds that you have. 2. If you are the personal representative (in some states, "executor") of the estate, and no advanced payment arrangements have been made, you are responsible for paying the funeral expenses from estate assets. Those assets can include the insurance proceeds if the insurance was payable to the decedent or to his/her estate. 3. If you are merely the life insurance beneficiary and #2 does not apply, you ordinarily have no obligation to pay the funderal bill.

If a beneficiary under a policy is deceased, and if the beneficiary designation did not provide for an alternate beneficiary, then the proceeds are payable to the insured's estate. To access the proceeds, you would probably need to go through probate or some other form of proceeding for the passing of a decedent's assets.

Only if he has a Will that leaves her assets or if he has assets held in a joint tenancy with right of survivorship with her, or payable on death to her, or designates her as beneficiary on, say, life insurance or retirement assets. Otherwise, no. Many men do this as they get older. They are afraid that the woman won't like them otherwise. Many times, they are correct.

theft of company assets.


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