April 24th, 2015 by Questions
Will the Licensed Insolvency Trustee take a life insurance policy after the client has passed on when it’s assigned to a beneficiary?
April 24, 2015 at 9:55 am, Doug Stuive, CA | Trustee | CIRP said:
Whether or not a trustee can take proceeds from a life insurance policy depends on who is the beneficiary on the policy. There are some preferred beneficiaries that protects the policy from seizure and some that are not. If the beneficiary is a spouse, parent, child or grandchild, then should the bankrupt pass on, the funds usually cannot be seized by the trustee. If the death benefit is paid to the “estate of the deceased” then the proceeds are paid to the bankruptcy trustee. However, if the beneficiary is a sibling, friend or other party, then the bankruptcy trustee may have an interest in the proceeds depending on who is the “owner” of the policy. If you are concerned about this you speak to your trustee before signing and bring a copy of the insurance policy for their review.
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