credit cards, life insurance, spendthrift parent

[Flaxbee]

I'll keep this as succinct as possible. Mom is a spendthrift, always has been, and it's one of the reasons she has nothing but welfare and her social security to live on.

She built a debit card into a credit card (if you manage the debit card well, they'll flip it to credit for you) after the last time she trashed her credit. She got another credit card. They now are both ballooning out of control, and while my sisters and I helped her when the payments were minimal (she'd need an extra $20 a month or so), there's no way we can keep up now. Mom has too much misplaced pride to let the cards go to a collection agency (she's afraid the people at the assisted living place where she lives would find out) nor will she go to a debt management co. Mom also has early Alzheimer's and is getting stubborn and kinda weird. My sisters and I have the ability to take over her finances (financial power of atty) but haven't so far b/c with a little help, she's been able to manage for herself. Mom also goes freaking nuts and wild with rage if we mention taking over her finances.

So, about 7-8 years ago, she transferred ownership of her life insurance to one of my sisters, and said sister has been paying the monthly premiums ever since.

My oldest sister can't bear to see mom mad or upset and has hesitated to exercise financial power of atty (we all have to do it together).

Lots more involved, but the main question is this: If mom dies with huge, wild, out of control credit card debt, can/will the credit card companies come after the life insurance on my mom but owned by my sister to recover their money? I know there are provisions for transferring ownership to protect assets, but the rules have changed to be so pro-business in the last few years that I don't know if the life insurance money would be safe, even though owned by someone other than my mom.

Anyone know what the answer might be? I'm about ready to go crazy....

[Dogmudgeon]

1. Who's the beneficiary?

That person/Those persons get(s) the money.

Period.

--p!

[Flaxbee]

2. my sisters and I are the beneficiaries.

I wouldn't put it past credit card companies to try to collect from us, though... ???

[TNDemo]

3. I don't think they can.

Life insurance proceeds are not part of the estate and they can only go after the estate.

[Bunny]

5. Thats what my lawyer told me when I did my will.

Creditors cannot take your life insurance payout as settlement of debt. This doesn't mean they won't try, so be sure your executor knows this, but they can't legally seize it for debt payment.

[Dogmudgeon]

4. Yes. They can call you.

They can call you once a month and ask you to give them all that money that you don't have to give them anyway.

And you can laugh at them and do your impression of Jackie Mason, Britney Spears and the late Gene Rayburn breaking wind in harmony.

--p!

[AlCzervik]

6. Credit cards are unsecured loans so the CC co's shouldn't be able

to touch the estate but----i would check with an estate lawyer.

[miss_kitty]

7. Life Insurance passes outside of the estate

they can only make demands on the estate. That's what probate is for. Check with an attorney, asap, so you can get some peace of mind.
My sympathies to you and your sisters.

[Flaxbee]

8. thanks, everyone, who replied...

I appreciate it. Perhaps I'll first talk to a lawyer for the elderly in her state and see what he/she says before going to an estate atty...

Dealing with aging, mentally infirm parents is rough.

[TNDemo]

9. Be ever so grateful that she signed a power of attorney.

Mine refused to and it did not get easier trying to convince her as the dementia increased. I ended up in court becoming her conservator, which is a major pain and drain on the wallet. Good luck! I have so BTDT and it is not easy.

[yellowdogintexas]

10. also: see if the credit cards have life insurance policies on them

some do..said policy will only pay off the balance on the card at death.

But the life insurance goes to the beneficiaries. Outside the estate and last time I checked, not subject to taxes.