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MShore
MShore, Attorney
Category: Legal
Satisfied Customers: 25285
Experience:  Negotiate, Draft, and Review many complex commercial agreements each year.
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Is there a law that states that a life insurance policy can

Resolved Question:

Is there a law that states that a life insurance policy can not be used to pay the deceased persons remaining debts in the state of California?
Submitted: 3 years ago.
Category: Legal
Expert:  MShore replied 3 years ago.
Thank you for the post, I am happy to assist you by answering your questions.No, not that it cannot be used to pay a persons remaining debts, but that it does not have to be used for that purpose. The beneficiary, if not the estate, determines how the money is to be spent. Please let me know if you have any follow up questions.
Customer: replied 3 years ago.
I just files for bankruptcy and my wife passed away 4 days later. I wanted to stop the bankruptcy but my attorney said I can't with a chapter 7 filing. The trustee in charge of my case now wants me to give him 100,000 dollars of my wifes life insurance to hold until all creditors are aware of the life insurance and determine if they are going to demand payment from me or not. I only owe about 40,000 dollars and I think that this request is ludicrous. While doing one of my final credit training video's the other day I thought I heard them say that life insurance cannot be used to pay for someones debts once they are deceased. This seems totally unfair to me. What do you think?
Expert:  MShore replied 3 years ago.
If you are the beneficiary, then the life insurance money is for your use as you see fit. But if your wife's estate is the beneficiary, then the money goes to the estate and the creditors are to be paid from the estate's assets, including the life insurance proceeds if necessary.
Customer: replied 3 years ago.
I am the beneficiary. My bankruptcy attorney said he thinks that in the state of California since it is a community property state that they can force me to pay my wifes debt. Is that true??
Expert:  MShore replied 3 years ago.
I do not think that completely true in all instances.If the debt your wife accumulated was during the marriage then the debt can be said to yours under the community property theory, but if it was prior to the marriage, it is her debt alone.
Customer: replied 3 years ago.
The debt was while we were married. We've been married for 28 years and we were only married to each other right out of high school. Thank you very much for your answers. This gives me some more information that I wasn't getting from my bankruptcy attorney. Do you think it is fair for the trustee to want to hold 100,000 dollars for a 40,000 dollar debt?
Expert:  MShore replied 3 years ago.
No, I do not, unless the trustee is concerned other debts may surface and wants the reserve $60,000 for this purpose.
Customer: replied 3 years ago.
There are definitely no other debts that will surface. You have to list everything in a bankruptcy even debts that you may have wanted to still pay. So I'm certain that thought process can't be his reasoning.Thank you very much for all of your help. I hope I wasn't to much of a bother. I can't believe I have to go through all of this just after losing the love of my life.
Expert:  MShore replied 3 years ago.
Thank you, XXXXX XXXXX am so sorry to learn of your wife's passing.Please remember to click Accept if I have answered your questions.
MShore, Attorney
Category: Legal
Satisfied Customers: 25285
Experience: Negotiate, Draft, and Review many complex commercial agreements each year.
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