Life Insurance Policy Beneficiary Missouri MO

Reader’s Question:

Hi. I am the beneficiary of my mother’s life insurance policy who died last week here in Missouri. She was a single mom, and I’m her only child. I just want to know: Do I get my benefits whole and tax-free, or do I need to pay my mother’s debts if she has any? I actually have no idea what to do.

Debbie

Columbia, MO

Hi, Debbie. Please accept my sincerest condolences on your mother’s passing. Well, Debbie, as the recipient of your mother’s policy, the responsibility of arranging her funeral imperatively falls on your shoulders. For funeral expenses, it usually costs about $7,000. Generally, costs vary depending on the type of service, geography and other extra factors. Also, keep in touch with your mom’s lawyer; ask if she left a last will or testament. If she has no will but has properties, it’s important that you know.

You can use part of the insurance money to pay for the estate taxes. It may be the reason why your mother got a life insurance policy in the first place, so you will have funds to draw from should you have to pay the Missouri estate taxes, and so that you will not be forced to sell her properties.

And to answer your question whether you are obliged to pay debts incurred by your mom, the answer is yes and no. If indeed she does have outstanding debts, these will be taken from her estate, which include bank account deposits, stocks, bonds, real estate properties and other things in her name, before the proceeds left, if any, go to you. Now, when it comes to the life insurance policy benefits, you will not be liable to pay for any of your mom’s debts or loans as it is written in the law that all proceeds of an insurance received by the designated beneficiary or trustee shall not be subject to debts of the insured nor to estate taxes. Such proceeds are payable to the beneficiary and not the insured’s estate.

Tags: insurance advice, life insurance