Death, Insurance and Bankruptcy

[paigemc]

My daughter and her husband have filed for bankruptcy, and their court date is August 10.

Tragically, my daughter died this past weekend. Her husband must still go to the bankruptcy hearing.

The issue is her life insurance. It is a USAA policy that she has had almost 10 years. But I am the beneficiary, not her husband or her estate.

Can the courts still take this benefit and put it to the payoff or is this considered outside the estate?

[Flamingo]

I am sorry for your loss. I highly suggest you speak will an estate planning lawyer right away concerning your situation because this event occurred after they filed. There will be an estate to settle and with a recently filed bankruptcy including her name there will be some issues. Make sure their BK attorney is also aware of you as the beneficiary of that policy. Did she recently make you the beneficiary or have you been the beneficiary for the term of the policy?

[paigemc]

She has had the policy for about ten years, and changed to me two or three years ago, following a major blow-out with her husband.

I've contacted the insurance company to get the basic information, and the form mentioned beneficiary or decedent being part of bankruptcy process.

[Pandora]

My condolences to you and your family for your loss.

[SMinGA]

Confirm with an attorney - I know your son in law (and you) are dealing with much right now, but a call to their BK attorney should cover it.

My understanding is the proceeds of a life insurance policy are the property/asset of the beneficiary and NOT part of the estate. If you confirm this to be true, it would mean the proceeds could be used however YOU want and not be part of the BK at all. (Unless you were involved in a personal case of course.)

[Fresh]

Ditto. Those insurance proceeds are yours. They are not included in the estate.

~Fresh!