Can I change a beneficiary BEFORE I file Chap. 13

[Law50]

I can not find information on whether changing a beneficiary on my life insurance before I file is illegal and/or a red flag. I want to put my adult son in place of my hubby, as I have small children and want to protect any provisions in the event of my death during a bk before it:unsure would be discharged. Can anyone help? I live in Ca.

[HHM]

Sorry for the pun, but that seems like overkill. What are the chances that you will die within 180 days of filing BK. Also, this is only an issue if you and your husband are filing jointly.

However, to answer your question, changing the beneficiary is not going to be an issue in your BK.

[Law50]

I think you misunderstood me...sorry if I confused you. If I die during my bk 3-5 yr. plan, I want the proceeds to go to my adult son to distribute to my children rather than it go to our creditors. And yes, we will file jointly. Thanks.

[HHM]

Okay, being that you are talking about a chapter 13...

1. First, is there an exemption that covers life insurance proceeds, many states have such exemptions.
2. I assume you mean your husband is the beneficiary.

The answer is the same; you can change the beneficiary before you file, that is not going to be a problem.

[momofthree]

Is this term life? If so, they won't even ask about who the beneficiary is. Since whole life has a cash value, it may be seen differently. I'm not sure since I've only ever had term...

[Law50]

Thanks to all. Yes, it is term. I did see from threads that some states have an exemption, but was not sure if Ca. was one of them.

[lrprn]

I did see from threads that some states have an exemption, but was not sure if Ca. was one of them.

California has two exemption systems 1 and 2 (the only state that has this). You and your lawyer select one system or the other - there's no mixing. Here's a link to both - http://www.bankruptcyaction.com/caexemptions.htm

System 1 under Insurance states, "Life insurance proceeds or avails if clause prohibits proceeds from being used to pay beneficiary's creditors". Does your term life insurance contract include such a clause?

System 2 doesn't include this exemption.

However, as HHM states, you can change the beneficiary to your adult son before filing - it won't be a problem. If you really want to be certain, discuss this with your lawyer and your insurance agent before you file. If you haven't retained a Ch 13 lawyer yet, then add this to your questions to ask during your free initial consultations with 3-4 experienced bk lawyers in your area.

[needanswers]

Okay, being that you are talking about a chapter 13...

1. First, is there an exemption that covers life insurance proceeds, many states have such exemptions.
2. I assume you mean your husband is the beneficiary.

The answer is the same; you can change the beneficiary before you file, that is not going to be a problem.

Can you also change the beneficiary of a term policy after you file?

[HHM]

Can you also change the beneficiary of a term policy after you file?

I don't see a problem. Sure.