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Education/Credentials J.D., University of Arizona 1990. B.A. Economics, California State University, Northridge 1986. For more details please click here
My sister has terminal cancer. She has a life insurance policy which names her husband as beneficiary. They have a mountain of debt, mostly medical but also credit card debt, and they have negative equity in their house.
The question is, should she change the life insurance beneficiary to their children (ages 14 and 16) rather than her husband? Would that shelter the proceeds from creditors, and allow him to file bankruptcy if necessary?
They live in southern California (LA area), they don't know any attorneys, and neither of them has the energy, time, or financial resources to research this. Someone (probably me) needs to tell them what to do.
Any suggestions?
Thanks!
...Steve
Answer Hi Steve. I'm sorry to hear about your sister's circumstances. As simple as your question is, the answer would require a good amount of research, so it's a bit beyond the scope of this free service. I can tell you that the proceeds of the life insurance are exempt to the extent necessary for the support of the surviving debtor and any dependents, so the amount is a critical factor. I'm not sure how or if transferring beneficiaries would change anything and/or whether there would be issues with the transfer. If you give me a couple of days and follow up, I'll try to find a preliminary answer to that.
