Beneficiary of Life Insurance

[keepmine]

HHM, I am not sure I follow you on the beneficiary proceeds. In your first post, you advise to wait 180 days before filing, which I am assuming is to avoid having the proceeds become the property of the bankruptcy. In a later reply, you give advice of contributing the proceeds to an IRA. If the beneficiary proceeds are considered as an inheritance, wouldn't the trustee demand the money anyway? Are insurance beneficiary proceeds considered an inheritance, or just income? Thank you in advance for your reply!

What we're trying to tell you is, once 180 days have passed where you are intitled to receive an inhertiance, the funds become just another asset. Your job is to turn the money into either an exempt asset {the IRA idea} or, spend it on living expenses.

[HHM]

The key to this question is that the Debtor "has not yet filed BK"

The 180 days I mentioned is not a hard or fast rule when it comes to assets and the BK assets and was in response to the OP's original idea of transferring the money to a friend or family member (and even then, waiting 180 days does not guarantee the trustee would not find out or go after the money).

My suggestion to the OP was to simply allow the policy to pay out, WAIT to file BK to avoid the impression of impropriety and put the money into exempt assets. A debtor is allowed to take non-exempt assets and make them exempt.

The fact that the proceeds are inheritance or life insurance proceeds is of little relevance PRE-BK...the proceeds are simply cash, and most states have a very limited, or no exemption for cash.