Is a life insurance beneficiary responsible for the debts of the benefactor in Mass.?
A friend of mine’s son passed away suddenly at the age of 49. He was divorced, and his son (aged 25) was the beneficiary of his life insurance policy. Will his son be responsible for his father’s debt? There was a loan made to him from his ex father and mother-in-law when he and his wife were still married, but in the divorce decree he signed he agreed to be solely responsible for that debt. I take that to mean that he alone was responsible, but can the insurance policy be attached for payment? Thanks for the help; serious and informed answers only, please.
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September 15th, 2010 at 5:02 am
No. Collectable debts can only be enforced by filing a claim with the court that handles probate, and insurance policies and retirement plans such as IRAs and 401Ks that have named beneficiaries pass outside of probate. That money is safe from creditors. It may not stop them from attempting to get it, but they have no legal claim to it, unless fraud can be proven.
September 15th, 2010 at 5:02 am
Life insurance benefits are different than other assets. The policy is a contract which provides for payment to the beneficiary so the son will get to keep the money. If he had any other assets they would be subject to creditor’s claims.
September 15th, 2010 at 5:02 am
Being the beneficiary of life insurance proceeds has no connection at all to handling debts of the deceased person’s estate.
September 15th, 2010 at 5:02 am
No, they are not related…..unless the deceased had an agreement in place, or collateral assignment on the policy indicating that the policy proceeds would be used to pay the debt.
September 15th, 2010 at 5:02 am
Debt is not inheritable. If the beneficiary is someone BESIDES the estate of the deceased, then they are NOT responsible for paying the debt. If the ESTATE is the beneficiary, all procedes from the estate – including the life insurance payout – must be liquidated to pay off all debts before any can be inherited.
Insurance policies cannot be attached.