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Home » Asset Protection » Life Insurance Without Named Beneficiary Not Protected From Creditors

Life Insurance Without Named Beneficiary Not Protected From Creditors

ByJon Alper January 20, 2011May 22, 2020

People should be able to protect from their creditors  their life insurance policies and death benefits payable to their heirs. Sometimes people make simple mistakes which expose large amounts of life insurance money.

Florida law protects cash value of life insurance you own on your own life. Upon your death the life insurance proceeds payable to your named beneficiary is also exempt from your creditor. The same death benefits may be exposed to your beneficiary’s creditors, but the proceeds are not exposed to your own creditors.

One of my clients had a $1 million life insurance policy without a named beneficiary. He had named his former spouse as the beneficiary, but they got divorced and the client had not substituted a new life insurance beneficiary. If this person were to die his life insurance would be payable to his probate estate. Probate assets are not exempt from creditors. In effect, unless this client names a beneficiary, or alternatively, transfers his policy to a life insurance trust, he may be paying life insurance premiums for the benefit of his creditors.

Last updated on May 22, 2020

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Jon Alper

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      • Nevis LLC
      • Offshore Bank Accounts
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      • Deficiency Judgments
      • Fact Information Sheet
      • Head of Household
      • IRS Tax Debt
      • Not Paying Judgments
      • Statute of Limitations
      • Wage Garnishment
      • Writ of Garnishment
    • Wills and Trusts
      • Avoiding Probate
      • Estate Planning
      • Gun Trusts
      • Inheritance Tax
      • Irrevocable Trusts
      • Last Will and Testament
      • Living Trusts
      • Living Will
      • LGBT Estate Planning
      • Power of Attorney
      • Probate
      • Special Needs Trust
      • Trust Administration
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      • Chapter 7 Bankruptcy
      • Chapter 13 Bankruptcy
      • Dealing With Creditors
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