Can life insurance proceeds be seized by creditors of the deceased?

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Can life insurance proceeds be seized by creditors of the deceased?

I have a term life policy and my wife is the sole beneficiary. I also have an unsecured personal debt that is mine alone — my wife is unaware of it and did not sign the note. If I die, do the policy proceeds go directly to my beneficiary wife or do they become part of my estate to be used to pay the unsecured creditor. Is my wife liable in any way for my debt?

Asked on March 21, 2012 under Estate Planning, California

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If you have a life insurance policy on your life where your wife is designated as the beneficiary under the policy, assuming you pass before she does with the policy in force, the insurance proceeds go to her under the laws of all states in this country as a gift outside of any probate of your estate assuming you have a Will.

The only way your wife would be respinsible for any of your debts upon passing would be if there are not enough assets in your estate to pay your creditors and the creditors assert that the debt you incurred is a martial community debt that your wife would be responsible for.

I suggest that you consult with a Wills and trust attorney about possible estate planning needs of you and your wife.

 


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