If I am the beneficiary of life insurance payment after someone dies, do I have to by law use that money to pay off the deceased debts? Or is this something that the bill collectors cannot touch at least legally? How would the creditors even know that there was a payout of life insurance? Anyway for them to know this? Can I get in trouble for not paying?
2007-09-13 08:06:02 · 8 answers · asked by pc 1 in Politics & Government ➔ Law & Ethics
There are certain loans and debts that cancelled upon someone's death...like most federal student loans.
However, mortgages, auto-loans, and credit cards are often covered by either the deceased's estate or the insurance policy prior to being dispursed to the beneficiary.
I suggest getting a lawyer to aid in the paperwork and obligations that go along with being a beneficiary.
2007-09-13 08:14:09 · answer #1 · answered by linzlou83 2 · 1⤊ 1⤋
The proceeds of Life Insurance is an asset of the estate with the beneficiary of the life insurance normally the legal next of kin or the executor/executrix of the estate. Those people would be legally bound to settle all debts of the estate and there are probate courts to make sure that you do that. Now, debtors have a specific amount of time to post claim to the estate with the probate court, following the publication of the obituary. If they fail to file with the court, I'd say they would have a hard time going after the beneficiary outside of the probate court.
2007-09-13 08:16:37 · answer #2 · answered by Jim 5 · 0⤊ 3⤋
I believe life insurance must go to cover the debts of the deceased prior to being dispersed to the beneficiary. That is part of the reason why you take out life insurance.
2007-09-13 08:09:38 · answer #3 · answered by msi_cord 7 · 2⤊ 2⤋
No it isn't a law that you have to satisfy the deceased debts with the Life insurance thats up to you but what is the right thing to do would the deceased have wanted you to pay off their debts
2007-09-13 08:13:19 · answer #4 · answered by tap158 4 · 1⤊ 2⤋
life insurance passes outside of probate . It belongs to the beneficiary, not the estate.
In fact, any such insurance of beneficiary entitlement, such as a 401K or retirement passes outside of probate as the beneficiary is the legal owner, not the deceased.
Again, if you don't KNOW the answer, don't disservice the poster by answering wrongly.
And yes, I AM an attorney.
2007-09-13 08:15:07 · answer #5 · answered by hexeliebe 6 · 4⤊ 2⤋
you have not any reason to pay any of your sister's money owed. those could be settled by capacity of liquidating the sources of her sources (her monetary employer money owed, very own sources, motor vehicle, etc.) If there is not adequate money from the sale of all those products to pay her money owed, then they flow unpaid. the companies she owed money to have no criminal perfect to make you pay something. Her existence coverage is a thoroughly separate rely. Your sister chosen to leave the proceeds of that coverage to her close chum. the money belongs to that chum. The chum is under NO criminal duty to supply any of that money to you, or to pay any of the funeral expenses, or to pay any of your sister's money owed. the money is HERS and HERS by myself.
2016-10-10 12:34:31 · answer #6 · answered by stancey 4 · 0⤊ 0⤋
yes, it is considered part of the estate and all assets available must be used to pay any outstanding debts owed before the remainder of the estate may be payed out.
2007-09-13 08:15:09 · answer #7 · answered by Jan Luv 7 · 0⤊ 4⤋
Unless you want to be stuck in court and paying it to lawyeres, YES
2007-09-13 08:10:00 · answer #8 · answered by Anonymous · 1⤊ 2⤋