My sister passed away, can her creditors seize the proceeds from her life insurance?

Her husband passed away last year and she does not have kids. Our parents are also deceased. All that is left is my brother, my sister and myself. She has all debts, $1,000 in a checking account and she owned two houses, both of which she owes more on them than they are worth. She has a life insurance policy of $140,000 and she did not list any beneficiaries. Will it go through probate and the creditors take the life insurance money?

Asked on March 24, 2015 under Estate Planning, Texas

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

I am so sorry for your loss and for the situation.  If there is no named beneficiary on the life insurance then it will be paid to "the Estate of...." and then yes, her creditors could indeed file a claim against those funds.  I would go and speak with an attorney on a consultation basis about the fiduciary negotiating the debts of the estate.  Good luck.


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