credit card debt

[JennK2009]

California/Illinois

My cousin died (in Calif) with a large amount of credit card debt. Is his family (in IL) obligated to pay off this debt with the life insurance policy? He was a single man, not married, no children.What is the name of your state (only U.S. law)?

 

[seniorjudge]

Who are the beneficiaries of the life insurance policy?

Who incurred the credit card debt?

GENERALLY the life insurance proceeds go outside the estate so the estate's bills are not paid out of the life insurance proceeds.

But we need more info.

 

[latigo]

Your cousin’s creditors would have access to the proceeds of the life policy ONLY if those proceeds are made payable to his estate. Which is uncommon and most unlikely inasmuch as he is survived by dependents.

In other words, if those proceeds are designated as fully payable to a named individual or individuals, then they pass directly to person or persons so designated by contract and not as an inheritance through the estate. Hence the proceeds do not become an asset of the estate where they would be subject to the claims of his creditors.

I strongly urge that affected family members consult with an Illinois attorney with regard to this and other issues relating to his untimely death.

My condolences to you and the family.

 

[curb1]

latigo,

You said, "Which is uncommon and most unlikely inasmuch as he is survived by dependents".

How did you arrive at the conclusion that "cousin" had dependents?

 

[JennK2009]

We don't know who he had designated as the beneficiary; either his parents or his sister. He incurred all the debt. Either one (folks or his sister/executor?) have to notify the credit card companies and make good on this.

I was a little afraid of the "estate" question. We have no clue what he had as far as an "estate." He does have a nice paid for car - BMW that no one really wants or needs. Savings? Retirement? No idea.

He was murdered so we are letting the police have everything (cell, computer, mail correspondence, etc) but are concerned about his high debt. I'd hate to see any monies he set aside for his family to be eaten up in fees.

If they need to settle the debt, that's fine. But, because of the circumstances, it could take a while. I guess my question should be to the police. This stinks.

Thanks for your input. I told my cousin (his sister) the same; get a lawyer. We just weren't even sure where - IL or CA.

 

[justalayman]

If nothing else, his car could be sold and the proceeds used to pay his debts. Anything else of value in his estate; same thing.

His estate has no value if his debts are greater than his assets.

 

[JennK2009]

Got it. Thank you.
jenn