Do my life insurance proceeds have to be used to pay my debts in Georgia?
If you have life insurance, you’ve probably purchased it with the idea that it will go to support your family after you pass away, not to pay your debts. I have some good news for you – in most cases, the life insurance will pass to your family members and will not be subject to the claims of creditors.
Typically, if you make life insurance proceeds payable to your spouse or your children, that money passes outside of your estate directly to your spouse or your children. Since it doesn’t become a part of your estate, it doesn’t become subject to the claims of creditors. Although many of my clients are debt free and aren’t worried about creditors, it’s possible that some creditors could surface after your death. For instance, if you died in a car wreck that was your fault and injured others, the other injured parties could make a claim against your estate, and any assets in your estate would be subject to the claims of creditors.
For those reasons, I usually recommend that my clients make their life insurance proceeds payable directly to an individual, or a trust for the benefit of their children. If they do that, the money will pass directly to their loved ones. It’s always a good idea to keep those beneficiary forms up to date, so I recommend that my clients update those forms as a part of the estate planning process.
Do you have any questions about life insurance proceeds and debts in Georgia? Call Sarah White, Marietta wills attorney, at 678-453-6490. I’ll be happy to provide you with a free phone consultation.