beneficiary of life insurance is different party than listed on will
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beneficiary of life insurance is different party than listed on will
I am executor of estate for my parents, who recently passed. My brothers and I
are beneficiaries of the will, but my parents bank is listed as beneficiary of
life insurance policy… This was originally done as collateral on a loan. The
loan has been paid off, but the life insurance still has the bank as
beneficiary…. As executor, what should/can I do? Am I still responsible for
paying my parents debts, or is the bank responsible?
Asked on March 26, 2017 under Estate Planning, Georgia
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
1) The insurance policy designation of beneficiaries trumps the will in that the insurance policy is a contract, and the proceeds go to whomever was contractually designated to receive them. So the bank does get the money.
2) However, that does not make the bank responsible for your parents' debts; their designation as recipient of the insurance proceeds does not obligate them to pay anything, the same way that if your parents had made a gift of $10,000 to you just before they died, you would not have to pay any of the debts with it. The estate is still responsible for their debts (NOT you personally): any creditors who seek payment will need to be paid from estate assets (you will have to administrate or oversee that process, as executor, but you don't pay out of pocket).
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