Are the children required to pay the debt out of the insurance proceeds they receive?
Full Question:
A person dies leaving a large amount of credit card debt. The sale of assets does not cover the entire amount of debt. The person has life insurance with his/her two children as equal beneficiaries. Are the children required to pay the rest of the debt out of the insurance moneys they receive?
05/15/2007 |
Category: Wills and Estates |
State: Iowa |
#4888
Answer:
Life insurance proceeds pass directly to the beneficiaries and are not part of the estate unless the estate is named as the beneficiary. Therefore, the beneficiaries named in the life insurance policy are not obligated to pay any debts of the deceased with the proceeds of the policy. The proceeds are, however, generally counted in the estate for estate tax purposes.