Legal Question in Bankruptcy in California

Life insurance beneficiary

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


Asked on 6/23/09, 2:31 pm

2 Answers from Attorneys
Jerold M. Gorski Law Offices of Jerold M. Gorski

Re: Life insurance beneficiary

Dear Steve,

You are probably on the right track, but your best course of action depends on all the facts. Additionally, postings on LawGuru are NOT attorney-client privileged, so discuss these matters only in private with licensed attorneys in your area (I do both estate planning and bankruptcy work). Your sister is lucky to have you - good luck.

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Answered on 6/23/09, 2:48 pm
Michael Stone Law Offices of Michael B. Stone Toll Free 1-855-USE-MIKE

Re: Life insurance beneficiary

You may be right, and please don't take this the wrong way, but it's impossible to tell from your question whether you are being helpful or merely meddlesome. This is why there is a state bar rule that says we must deal only with the person(s) directly involved with the situation and not others, however well-intentioned.

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Answered on 6/23/09, 3:17 pm


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