B—Digests Of Insurance Exemption Laws
Federal Election:
Not
allowed.[Ala. Code §
Life Insurance: Death Proceeds—
The
proceeds of life insurance policies taken out by a person on his own life or on
another`s life, in favor of a person other than himself, are payable to the
beneficiary free from claims of creditors of the insured or the person
effecting the insurance, whether or not the right to change the beneficiary has
been reserved, and whether or not the policy is payable to the insured if the
beneficiary dies first.
Endowment And Surrender Proceeds—
The
cash surrender value of an insurance policy constitutes part of the proceeds of
the policy and is exempt from claims of creditors in bankruptcy. Exempt
proceeds include death benefits, cash surrender and loan values, premiums
waived and dividends, whether used in reduction of premiums or otherwise,
excepting only where the debtor subsequent to issuance of the policy, has
actually elected to receive the dividends in cash.[Ala. Code §27-14-29]
Group Insurance:
No
specific statutory provision.
Fraternal, Etc., Insurance:
Fraternal
benefits and the interest of resident beneficiaries in mutual aid association
payments are exempt from execution for the claims of creditors.[Ala. Code
§27-34-27]
Disability Benefits:
The
proceeds of all contracts of disability insurance and of provisions providing
benefits on account of the insured`s disability that are supplemental to life
insurance or annuity contracts shall be exempt from all liability for any debt
of the insured and from any debt of the beneficiary existing at the time the
proceeds are made available for his use. The exemption of income benefits
payable as the result of disability shall not exceed an average of $250 of such
benefits per month of the period of disability.[Ala. Code §27-14-31]
Annuities:
The
benefits due under any annuity contract are not subject to execution in favor
of creditors except for amounts paid as premiums on any annuity with intent to
defraud creditors, with interest thereon. The total exemption under all annuity
contracts in which an annuitant is entitled to receive benefits is limited to
$250 per month.[Ala. Code §27-14-32]
Spendthrift Provisions: Trusts—
An
express trust for the support, maintenance, and education of a relative of the
grantor is not liable for and may not be seized for a debt of the
beneficiary.[Ala. Code §
Insurance Proceeds—
Under
the terms of any annuity contract or life insurance policy, the proceeds may be
retained by the insurer and not subject to assignment or alienation by the
beneficiary, if permission to do so is expressly withheld by the terms of such
contract or policy. If such contract or policy so provides, no payment of
interest or principal shall be subject to such person`s debts, contracts or
engagements, nor to any judicial process to levy upon or attach the same for
payment thereof.[Ala. Code § §27-14-30, 27-14-32(b)]
Premiums:
Premiums
paid with the intent to defraud creditors will inure, together with interest,
to their benefit out of the proceeds.[Ala. Code § §
Federal Election:
Allowed
but limited by state exceptions.[Alaska Stat. §09.38.055]
Life Insurance: Death Proceeds—
Proceeds
payable to a spouse or dependent of the insured are considered
"earnings" and are exempt to the extent that disposable earnings do
not exceed $350
Federal Election:
Not
allowed.[Ariz. Stat. §33-1133(B)]
Life Insurance: Death Proceeds—
Proceeds
of insurance payable to a surviving spouse or child of the insured are exempt
up to $20,000.[§33-1126, Ariz. Rev. Stats. Ann.]
Endowment And Surrender Proceeds—
Where
for a continuous period of one year, a policy of life insurance has named as
beneficiary the insured`s surviving spouse, child, parent, brother, sister or
dependent, the cash surrender value of the insurance shall be exempt from
claims and demands of all creditors to the extent of $1,000 per beneficiary not
to exceed $5,000 in the aggregate.[§33-1126, Ariz. Rev. Stats. Ann.]
Group Insurance:
Policies
or proceeds payable to insured or beneficiary are not liable, either before or
after payment, for any liability of any person having a right under the policy.
Proceeds, when not made payable to a named beneficiary or to a third person
under a facility-of-payment clause, do not constitute a part of the estate of
the insured for payment of his debts.[§20-1132, Ariz. Rev. Stats. Ann.]
Fraternal, Etc., Insurance:
Benefits
are not liable to attachment, garnishment or other process to pay debts of a
member or beneficiary or of any other person who may have a right thereunder,
either before or after payment.[§20-881, Ariz. Rev. Stats. Ann.]
Disability Benefits:
Exempt.[§33-1126,
Ariz. Rev. Stats. Ann.]
Annuities:
No
statutory provision.
Spendthrift Provisions: Trusts—
Subject
to certain exemptions, restraints on the voluntary or involuntary transfer of a
beneficiary`s interest in trust income or principal exempt the beneficiary`s
interest in income and principal from enforcement of money judgments until the
interest is paid or becomes due and payable.[§14-7701 Ariz. Rev. Stats. Ann]
Insurance Proceeds—
A
statute protects $20,000 of proceeds of life insurance upon a deceased spouse,
parent or guardian payable to a surviving spouse or child.[§33-1126, Ariz. Rev.
Stats. Ann.]
Premiums:
Premiums
paid with the intent of defraud creditors will inure, together with interest,
to their benefit out of the proceeds.[§20-1131, Ariz. Rev. Stats. Ann.]
Federal Election:
Not
allowed.[Ark. Stat. §16-66-218]
Life Insurance: Death Proceeds—
The
proceeds of policies of insurance taken out by a person on his own life or on
another`s life, in favor of a person other than himself, are payable to the
beneficiary free from claims of creditors of the insured or the person
effecting the insurance, whether or not the right to change the beneficiary is
reserved and whether or not the policy is payable to the insured if the
beneficiary dies first.[16-66-209, Ark. Stats. Ann.]
Where
the policy was payable to the executor or administrator of the insured, it is
not "in favor of a person other than himself," and the insured`s
creditors were not prohibited from participating in the proceeds.[Lee v.
Potter, 193 Ark. 401, 100 S.W.2d 252]
A
married woman, in her own name or that of a trustee for her benefit, may insure
her husband`s life, and the proceeds paid to the wife, if she survives, are
free from claims of the husband`s creditors whether or not the right to change
the beneficiary is reserved, and if the wife in such case dies first, the
insurance may be made payable to the children for their use or to a guardian if
they are under age, and the proceeds are likewise exempt.[23-79-128 Ark. Stats.
Ann.]
Endowment And Surrender Proceeds—
The
proceeds, including cash surrender and loan values, are exempt under the same
circumstances as are death benefits.[16-66-209, Ark. Stats. Ann.] Furthermore,
the cash surrender value of life policies naming the bankrupt`s wife as
beneficiary are not assets of the bankrupt`s estate, notwithstanding the fact
that the right to change the beneficiary is reserved.
Group Insurance:
Policies
or proceeds payable to the insured or beneficiary are not liable, either before
or after payment, for any liability of any person having a right under the
policy. Proceeds, when not made payable to a named beneficiary or a third
person under a facility-of-payment clause, do not constitute a part of the
insured`s estate for payment of his debts.[23-70-132, Ark. Stats. Ann.]
Fraternal, Etc., Insurance:
Benefits
paid by fraternal benefit societies are exempt from debts of the member or
beneficiary or any other person having a right under the policy, either before
or after payment.[23-74-403 Ark. Stats. Ann.]
Disability Benefits:
Proceeds
of disability insurance, and benefits payable on account of the insured`s
disability which are supplemental to life insurance or annuity contracts, are
exempt from the debts of the insured, and from any debts of his beneficiary
when such benefits are made available for her use.[23-79-133, Ark. Stats. Ann.]
Annuities:
The
benefits, rights, privileges, and options due or prospectively due an annuitant
are not subject to execution nor shall the annuitant be compelled to exercise
his rights and powers, nor shall creditors be allowed to interfere with or
terminate the contract; except that the exemption shall not apply to amounts
paid for any annuity with intent to defraud creditors, or to so much of the
annuity benefits as exceed the exemptions granted annuitant by law.[23-79-134,
Ark. Stats. Ann.]
Spendthrift Provisions: Trusts—
No
statutory provision. However, spendthrift trusts are held valid.[Bowlin v.
Citizens Bank & Trust Co., 131
Insurance Proceeds—
If
the contract so provides, the benefits, rights, etc. accruing under contract to
a beneficiary shall not be transferable nor subject to a commutation and if the
benefits are payable periodically, the same exemptions and exceptions contained
herein for the annuitant, shall apply with respect to such beneficiary.[Title
66, §3231(2), Ark. Stats. Ann.]
Premiums:
Premiums
paid with the intent to defraud creditors, together with interest, will inure
to their benefit out of the proceeds.[Title 66, §3228, Ark. Stats. Ann.]
Federal Election:
Not
allowed.[Cal. Civ. Proc. Code §703.130]
Life Insurance: Death Proceeds—
Two
alternative state law exemptions are available. If the debtor makes an election
under §703.140(b), all death proceeds of policies payable to a debtor who is a
dependent of the insured are exempt.[Cal. Civ. Proc. Code §703.140(b)(11)(C)]
Endowment And Surrender Proceeds—
Unmatured
life insurance and endowment policies are exempt. Dividends and loan values
aggregating $4,000 ($8,000 for a married debtor) are exempt.[Cal. Civ. Proc.
Code § §703.140(b)(6), 704.100] Under one set of exemptions, benefits from
matured policies are exempt to the extent reasonably necessary for the support
of the judgment debtor and the spouse and dependents of the judgment
debtor.[Cal. Civ. Proc. Code §704.100]
Group Insurance:
Same
as other insurance.
Fraternal, Etc., Insurance:
Same
as other insurance.[Also see Cal. Civ.Proc. Code §704.170]
Disability Benefits:
Exempt.[
Annuities:
Same
as endowment and surrender proceeds. Also see Cal. Civ. Process Code §704-100
Spendthrift Provisions: Trusts—
If
there is no provision for accumulation of income in a trust, a judgment
creditor may reach any income beyond that necessary for the education and
support of the beneficiary.[Cal. Civ. Code §859] However, subject to certain
qualifications, if a trust provides that a beneficiary`s interest in income or
principal is not subject to voluntary or involuntary transfer, the
beneficiary`s interest is not subject to the enforcement of a money judgement
until it is paid to the beneficiary.[Cal.Prob. Code §15300]
Insurance Proceeds—
A
policy may provide that the proceeds may not be alienated and are not subject
to the claims of creditors.[Cal. Ins. Code § §10132,10171]
Premiums:
No
statutory provision.
Federal Election:
Not
allowed.[Colo. Stat. 13-54-107]
Life Insurance: Death Proceeds—
The
proceeds of policies or certificates of life insurance to the extent of $5,000
are exempt from levy and sale under writ of attachment or writ of
execution.[Colo. Rev. Stats. 13-54-102(l)]
Endowment And Surrender Proceeds—
No
statutory provision.
Group Insurance:
Policies
of group insurance and the proceeds thereof are exempt from claims of creditors
of the member and of the beneficiary.[Colo. Stat. §10-7-205]
Fraternal, Etc., Insurance:
Proceeds
of fraternal benefit societies are exempt from execution to pay any debt of the
member or beneficiary or any other person, either before or after
payment.[Colo. Rev. Stats. §10-14-122.]
Disability Benefits:
Sickness
and accident insurance payments are exempt up to $200 per month during any
period of covered disability. A lump sum payment for an insured loss is also
exempt.[Colo. Rev. Stats. §10-16-212]
Annuities:
No
statutory provision, other than that relating to spendthrift trusts, below.
Spendthrift Provisions: Trusts—
There
is no general statute, but spendthrift trusts are held valid.[Snyder v.
O`Conner, 102
Insurance Proceeds—
A
statute provides that proceeds of annuity contracts and life insurance policies
retained by the insurer at maturity may, by agreement, be exempt from the
claims of creditors of the beneficiary.[Colo. Rev. Stats. §10-7-106]
Premiums:
No
statutory provision.
Federal Election:
Allowed.
Life Insurance: Death Proceeds—
The
beneficiary of any life policy, if a person other than the insured (whether
named in the original policy or later under the terms of the policy), is
entitled to the proceeds of such policy as against the representatives or
creditors of the insured.[§38-161, Conn. Gen. Stats.]
Endowment And Surrender Proceeds—
It
has been held that not only the proceeds at death, but the cash values during
the insured`s lifetime, are exempt from claims of insured`s creditors in
bankruptcy, even though the right to change the beneficiary is reserved.[Pearl
v. Goldberg, 300 F.2d 610]
Group Insurance:
No
specific statutory provision.
Fraternal, Etc., Insurance:
Fraternal
benefit society payments are exempt from claims of creditors of members and
beneficiaries.[§38-229, Conn. Gen. Stats.]
Annuities:
No
statutory provision other than that relating to spendthrift provisions below.
Spendthrift Provisions: Trusts—
Spendthrift
trusts are recognized by statute.[§52-321, Conn. Gen. Stats.] Where the trust
is expressly for the support of the beneficiary or his family, only the surplus
income over that needed for support can be reached by creditors.
Insurance Proceeds—
Any
domestic insurance company may hold the proceeds of any policy issued by it
under a trust or other agreement upon such terms and restrictions as to
revocation by the policyholder and control by the beneficiary, and which such
exemptions from the claims of creditors of the beneficiary, other than the
policyholder, as are agreed to in writing by such company and the policyholder.
The act applies also to proceeds of life insurance or annuity contracts held by
nonresident or foreign companies doing business within the state.[§38-162,
Conn. Gen. Stats.]
Where
documents setting up employee pension fund gave trustees of fund the power to
withhold payments and provided that payments from fund were expressly reserved
for support of beneficiary, there was created a valid spendthrift trust which
protected funds of beneficiary employee from attachment or garnishment by
creditor.[Hildreth Press Emp. Federal Credit Union v. Connecticut General Life
Ins. Co., 295 A.2d 54, 30 Conn. Supp. 513]
Premiums:
If
a policy is procured or the beneficiary named with the intent to defraud
creditors, the proceeds become part of the insured`s estate to be used by the
administrator to pay debts and costs of administering and then to pay any
balance over to the beneficiary. If any premiums have been paid with intent to
defraud creditors, the amount thereof becomes part of the estate to be
similarly used by the administrator.[§38-161, Conn. Gen. Stats.]
Federal Election:
Not
allowed.[Del. Code §10-4914(a)]
Life Insurance: Death Proceeds—
The
proceeds of life insurance policies taken out by a person on his own or
another`s life and payable to a beneficiary are free from claims of creditors
of the insured or beneficiary.[Title 18, §2725, Del. Code Ann.]
Endowment And Surrender Proceeds—
No
statutory provision.
Group Insurance:
Policies
or proceeds payable to the insured or beneficiary are not liable for the debts
of the insured or beneficiary either before or after payment of such
proceeds.[Title 18, §2727, Del. Code Ann.]
Fraternal, Etc., Insurance:
Fraternal
benefit society payments are exempt from the debts of a member or beneficiary.[Title
18, §6118, Del. Code Ann.]
Disability Benefits:
The
proceeds of all contracts of health insurance and of provisions providing
benefits on account of the insured`s disability which are supplemental to life
insurance or annuity contracts shall be exempt from all liability for any debt
of the insured, and from any debt of the beneficiary existing when the proceeds
are made available to him.[Title 18, §2726, Del. Code Ann.]
Annuities:
Benefits
not in excess of $350 a month from all annuity contracts are exempt from the
claims of creditors of the annuitant. Amounts paid for, on a premium on the
annuity with intent to defraud creditors plus interest, insure to the
creditors.[Title 18, §2728, Del. Code Ann.]
Spendthrift Provisions: Trusts—
Spendthrift
trusts are authorized and protected by statute. However, a beneficiary may
assign gratuitously in writing a stated part of his entire remaining income
interest in such trust to the State of
Insurance Proceeds—
Any
life insurance company may hold the proceeds of any policy issued by it under a
trust or other agreement with such exemptions from claims of the beneficiaries`
creditors other than the policyholder as are agreed upon by the insurer and the
policyholder or insurer and beneficiary.[Title 18, §2729, Del. Code Ann.]
Premiums:
Premiums
paid with the intent to defraud creditors, with interest, inure to the
creditors out of the proceeds.[Title 18, §2725, Del. Code Ann.]
Federal Election:
Allowed.
Life Insurance: Death Proceeds—
The
proceeds of a policy effected by any person on his own life or on another`s
life, in favor of a person other than himself, shall go to the named
beneficiary as against the creditors and representatives of the insured or the
person effecting the insurance, whether or not the right to change the
beneficiary has been reserved, and whether or not the policy reverts to the
insured if the beneficiary dies first.[§35-521, D.C. Code]
Endowment And Surrender Proceeds—
No
statutory provision.
Group Insurance:
Group
insurance proceeds are exempt from claims of the creditors of the
insured-employee and of his beneficiary as well.[§35-523, D.C. Code]
Fraternal, Etc., Insurance:
Fraternal
association benefits are exempt from claims of creditors of the certificate holder
and of the beneficiary.[§35-1211,D.C. Code]
Disability Benefits:
Disability
insurance payments are exempt from creditors of the insured, except where the
claims arise from furnishing of necessities.[§35-522, D.C. Code]
Annuities:
No
specific statutory provisions but a statement on insurance, and
"annuities, not otherwise exempted, not to exceed $200 each month, of a
person residing in the District of Columbia, or of a person who earns the major
portions of his livelihood in the District of Columbia, . . . who provides the
principal support of a family, for two months next preceding the issuing of any
writ or process against him, . . .are exempt from process".[§15-503, D.C.
Code] With persons in like situations who do not provide the support of a family,
the exemption is not to exceed $60.00 per month.[§115-503(b), D.C.Code]
Spendthrift Provisions: Trusts—
There
is no general statute, however spendthrift trusts are held valid.[Morrow v.
Apple, 26 F.2d 543]
Insurance Proceeds:
Any
life company licensed under the laws of the District may hold the proceeds of
any policy issued by it with such exemptions from the claims of creditors of
the beneficiaries other than the policyholder as shall have been agreed to in
writing between the insurer and policyholder.[§35-525, D.C. Code]
Premiums:
Premiums
paid with the intent to defraud creditors, together with interest, will inure
to their benefit out of the proceeds.[§35-521, D.C. Code]
Federal Election:
Not
allowed. [F.S.A., §222.20]
Life Insurance: Death Proceeds—
Proceeds
of life insurance paid to any named beneficiary (other than the insured`s
estate) are exempt from the claims of the insured`s creditors. If the insured`s
estate is named beneficiary, and he has not specifically bequeathed the
proceeds or subjected them to the debts of his estate, the statute diverts them
to his surviving spouse and children in equal portions just as though the
insured had named them beneficiaries. In such instance, the proceeds are
not subject to claims of the insured`s creditors even though paid to his
estate. The insured may specifically bequeath insurance proceeds which are
payable to his estate, and they are then free of his creditor`s claims. He may
also, in his will, subject the proceeds to his estate debts. However, if the
insured dies intestate or does not specifically bequeath the proceeds, and
there is no surviving spouse or children, the proceeds become part of his
estate subject to creditors` claims.[F.S.A., §222.13]
Endowment And Surrender Proceeds—
The
cash surrender values of life insurance policies issued upon the life of a
resident are not subject to creditors of the insured, unless the policy was
effected for the benefit of such creditors.[F.S.A., §222.14]
Group Insurance:
No
specific statutory provision.
Fraternal, Etc., Insurance:
The
benefits of a fraternal society are exempt from creditors of the member,
beneficiary, or any other person.[F.S.A., §632.619]
Disability Benefits:
Disability
income benefits under any policy or contract of life, health, accident or other
insurance of whatever form are exempt from attachment, garnishment or other
legal process in favor of any creditor of the recipient, unless the policy was
effected for the benefit of such creditor.[F.S.A., §222.18]
Annuities:
Exempt.[F.S.A.,
§222.14]
Spendthrift Provisions: Trusts—
No
statutory provisions. But spendthrift trusts are held valid.[Waterbury v. Munn,
159 Fla. 754, 32 S.2d 603]
Insurance Proceeds—
No
cases have been found dealing with a spendthrift trust clause in an insurance
policy.
Premiums:
No
statutory provision nor cases have been found dealing with premiums paid in
fraud of creditors.
Federal Election:
Not
allowed.[Ga. Code Ann. §44-13-100]
Life Insurance: Death Proceeds—
The
proceeds of any life, endowment or annuity policy effected by any person on his
own life or another`s life, in favor of a person other than himself, shall go
to the named beneficiary as against the creditors and representatives of the
insured or the person effecting the insurance, whether or not the right to
change the beneficiary has been reserved, and whether or not the policy is
payable to the insured if the beneficiary dies first.[§33-25-11 Ga. Code Ann.]
Endowment And Surrender Proceeds—
Unmatured
policies are exempt. Dividends, interest, and loan values are exempt up to
$2,000.[Ga. Code Ann. §44-13-100]
Group Insurance:
The
proceeds of group insurance are exempt from the claims of creditors unless such
insurance was issued in their favor.[§33-27-7, Ga. Code Ann.]
Fraternal, Etc., Insurance:
Benefits
of a fraternal society are exempt from creditors of the member and
beneficiary.[Ga. Code Ann. §35-15-20]
Disability Benefits:
Proceeds
of accident and health policies, and of disability provisions supplemental to
life insurance or annuity contracts, are exempt from liability for the
insured`s or beneficiary`s debts; except the exemption shall not apply to so
much of the benefits as exceed $250 per month.[§33-29-15 ,Ga. Code Ann.] This
exemption is available regardless whether the debtor is bankrupt. A debtor in
bankruptcy may elect to exempt all disability benefits to the extent reasonably
necessary to support the debtor and the debtor`s dependents.[Ga. Code Ann.
§44-13-100]
Annuities:
See
"Life Insurance" above.
Spendthrift Provisions: Trusts—
Trusts
may be created for the benefit of minors or adults who are
spendthrifts.[§53-12-28, Ga. Code Ann.]
Insurance Proceeds—
No
case has been found dealing with a spendthrift trust clause in an insurance
policy.
Premiums:
Premiums
paid with the intent to defraud creditors inure to their benefit out of the
proceeds.[§33-25-11, Ga. Code Ann.]
Federal Election:
Allowed.
Life Insurance: Death Proceeds—
All
proceeds payable because of the death of the insured under any life or
endowment policy or annuity contract, whether or not the right to change the
beneficiary is reserved, and whether or not the estate of the insured is a
contingent beneficiary, shall be exempt from execution, attachment or other
process for the debts or liabilities of the insured.
A
policy made payable to or for the benefit of the spouse of the insured will,
unless contrary to the terms of the policy, inure to the separate use and
benefit of such spouse. A married woman may, without the consent of her
husband, obtain a life, health or accident policy on her husband or children.
Such policy inures to her separate use or benefit, free from the claims of her
husband or other persons.[§431:10-232(a) ,Haw. Rev. Stats.]
Endowment And Surrender Proceeds—
The
aggregate net cash value of any or all life and endowment policies and annuity
contracts payable to a wife or husband of the insured, or to a child, parent or
other person dependent upon the insured, are exempt to the same extent and
under the same circumstances as are the death proceeds.[§431:10-232(a), Haw.
Rev. Stats.]
Group Insurance:
The
proceeds of group insurance are exempt from claims of creditors, unless such
insurance was issued in their favor.[§431:10-233, Haw. Rev. Stats.]
Fraternal, Etc., Insurance:
Fraternal
benefits are not attachable by the creditors of a member or
beneficiary.[§432:2-404, Haw. Rev. Stats.]
Disability Benefits:
Proceeds
of disability insurance policies and disability benefits supplemental to life
or annuity policies are exempt from liability for the insured`s debts or debts
of the beneficiary when the proceeds are made available.[§431:10-231, Haw. Rev.
Stats.]
Annuities:
See
"Life Insurance" above and "Spendthrift Provisions" below.
Spendthrift Provisions: Trusts—
No
statutory provision. However, spendthrift trusts are held valid.[In re
MacFarlane, 45 F.2d 992]
Insurance Proceeds:
The
proceeds of any life or endowment policy or annuity contract may be retained by
the company for payment to any beneficiary, other than the insured, and such
beneficiary may not commute, encumber, assign or otherwise anticipate his
interest if such right is expressly denied him by the terms of the policy. If
the beneficiary is the spouse, child, parent or other person dependent upon the
insured, his interest under the settlement plan is exempt from claims of
creditors of such beneficiary, whether or not the contract or policy permits or
denies him the right to commute, encumber, alienate, assign or otherwise
anticipate his interest.[§431:10-232(b) Haw. Rev. Stats.]
Premiums:
If
premiums are paid in fraud of creditors, they may bring suit to recover such
premiums.[§431:10-232(a), Haw. Rev. Stats.]
Federal Election:
Not
allowed.[Idaho Code §11-609]
Life Insurance: Death Proceeds—
The
proceeds of a policy of insurance effected by any person on his own life or on
another`s life, in favor of a person other than himself, shall go to the named
beneficiary as against the creditors and representatives of the insured and of
the person effecting the insurance, and such proceeds are also exempt from all
liability from any debt of the beneficiary existing at the time the policy is
made available for her use; and this is true whether or not the right to change
the beneficiary was reserved, and whether or not the policy is made payable to
the insured if the beneficiary dies first.[§41-1833, Idaho Code]
Any
policy payable to or for the benefit of a married woman, whether procured by
herself, her husband or any other person, shall, unless contrary to the terms
of the policy, inure to her separate use and benefit.[§41-1830, Idaho Code]
Endowment And Surrender Proceeds—
Cash
surrender values are exempt to the same extent and under the same circumstances
as are death proceeds.[§41-1833, Idaho Code]
Group Insurance:
The
proceeds of group insurance are exempt from claims of the creditors of the
insured employee and his beneficiary.[§41-1835, Idaho Code.]
Fraternal, Etc., Insurance:
The
benefits of a fraternal society are exempt from creditors of the member,
beneficiary or any other person having a right thereunder.[§41-3218, Idaho
Code]
Disability Benefits:
Proceeds
of disability insurance, whether provided by separate contract or by supplement
to a life insurance or annuity contract, are exempt from the insured`s and
beneficiary`s debts existing at the time the proceeds are made
available.[§41-1834 Idaho Code]
Annuities:
The
benefit, rights, privileges and options due or prospectively due an annuitant
are not subject to execution, nor shall the annuitant be compelled to exercise
his or her rights and powers, nor shall creditors be allowed to interfere with
or terminate the contract; except that the exemption shall not apply (1) to
amounts paid for any annuity with intent to defraud creditors, or (2) to so
much of the annuity benefits as exceed the sum of $350 per month.[§41-1836,
Idaho Code]
Spendthrift Provisions: Trusts—
No
statutory provision.
Insurance Proceeds:
No
cases have been found dealing with a spendthrift trust clause in an insurance
policy.
Premiums:
Premiums
paid with the intent to defraud creditors will inure, together with interest,
to the benefit of those creditors.[§41-1833, Idaho Code]
Federal Election:
Not
allowed
Life Insurance: Death Proceeds—
All
proceeds of life insurance payable because of the death of the insured and the
aggregate net cash value of all life and endowment policies and annuity
contracts payable to a wife, husband, child, parent or other person dependent
on the insured, whether or not the right to change the beneficiary is reserved
and whether or not the insured or his estate is a contingent beneficiary, shall
be exempt from execution, attachment, garnishment or other process for the
debts and liabilities of the insured.[215 ILCS 5/238]
It
has been held that where a wife was personally liable on a promissory note with
her deceased husband and was also beneficiary of insurance which she elected to
have paid to her in monthly installments, the proceeds of insurance were
subject to garnishment for unpaid balance of the note as to the policies which
contained no provisions whereby extended payments should be either unassignable
or not subject to incumbrance. The creditor could garnish future payments on
these policies.[Roth v. Kaptowsky, 393 Ill. 484, 66 N.E.2d 664; 401 Ill. 424,
82 N.E.2d 661]
Endowment And Surrender Proceeds—
See
"Life Insurance" above.
Group Insurance:
No
specific statutory provision.
Fraternal, Etc., Insurance:
Benefits
of a fraternal society are exempt from creditors of the member or beneficiary
or any other person who may have a right thereunder, either before or after
payment by the society.[215 ILCS 5/299.1a]
Disability Benefits:
No
statutory provision.
Annuities:
See
"Life Insurance," above and "Spendthrift Provisions,"
below.
Spendthrift Provisions: Trusts—
Property
held in trust for a debtor is exempt if the trust has, in good faith, been
created by a person other than the judgment debtor.
Insurance Proceeds:
Any
domestic life company may hold the proceeds of any policy issued by it with
such exemptions from claims of creditors of beneficiaries other than the
policyholder as shall have been agreed to in writing by such company and the
policyholder. The same rule applies to a foreign or alien company when
authorized by its charter or laws of its domicile.
Premiums:
Premiums
paid in fraud of creditors may be recovered by such creditors.[215 ILCWS 5/238]
Federal Election:
Not
allowed.[Ind. Code §34-28-0.5]
Life Insurance: Death Proceeds—
A
policy naming as beneficiary, or assigned to, a spouse, child, or dependent
relative of the insured is exempt from the claim of creditors. This includes
death proceeds, cash surrender and loan values, premiums waived and dividends.[Ind.
Code §27-1-12-14]
Endowment And Surrender Proceeds—
See
above.
Group Insurance:
The
proceeds of group insurance are exempt from claims of creditors of the
insured-employee and of the beneficiary as well.[Ind. Code §27-1-12-29]
Fraternal, Etc., Insurance:
The
benefits of a fraternal society are exempt from creditors of the member,
beneficiary, or any other person having a right thereunder.[Ind. Code §
§27-11-6-3.]
Disability Benefits:
No
statutory provision.
Annuities:
No
specific provision other than that relating to spendthrift trusts, below.
Spendthrift Provisions: Trusts—
Spendthrift
trusts are recognized as valid, except that they may not be recognized if the
grantor of the trust is a beneficiary.[Ind. Code §30-4-3-2]
Insurance Proceeds—
Insurance
companies may hold proceeds of life insurance or annuities in trust with such
exemptions from the claims of creditors of beneficiaries other than the
policyholder as are agreed to by the insurer and the policyholder except where
payable to the person providing the consideration.[Ind. Code §27-2-5-1] In
addition, proceeds paid into a trust are not part of the insured`s estate and
are not subject to the debts or taxes of the insured to any greater extent than
if they were paid to a named beneficiary other than the estate.[Ind. Code
§27-1-12-16]
Premiums:
No
statutory provision, nor cases dealing with premiums paid in fraud of creditors
have been found.
Federal Election:
Not
allowed.[§627.10, Iowa Code]
Life Insurance: Death Proceeds—
The
proceeds of a policy of insurance on the life of an individual in the absence
of an agreement to the contrary shall inure to the separate use of the spouse
and children of such individual, independently of his creditors.
Further,
the proceeds of all policies of life, health, disability or accident insurance
payable to the surviving widow are exempt from liability for all debts if such
beneficiary contracted prior to the death of the assured, but the amount thus
exempted cannot exceed $15,000.[§511.37, Iowa Code Ann.]
Endowment And Surrender Proceeds—
The
proceeds of an endowment policy payable to the assured on attaining a certain
age are exempt from liability for any of his debts.[§511.37, Iowa Code Ann.]
Group Insurance:
Proceeds
are exempt from liability for the debts of the insured employee or the
beneficiary.[§509.12, Iowa Code Ann.]
Fraternal, Etc., Insurance:
Fraternal
association proceeds receive the same statutory exemptions provided for life
and endowment proceeds, and benevolent society and mutual aid insurance
proceeds are exempt from creditors of a decedent in the absence of special
contract.[§512.17, Iowa Code Ann.]
Disability Benefits:
Benefits
paid under an accident, health or disability policy are, by statute, exempt to
the assured, or, in case of death, to the spouse, and children, from his
debts.[§627.6, Iowa Code Ann.].[See: "Life Insurance" above.]
Annuities:
No
statutory provision.
Spendthrift Provisions: Trusts—
Spendthrift
trusts are held valid by the State courts.[In Re Tone`s Estate, 240 Iowa 1315,
39 N.W.2d 401]
Insurance Proceeds—
Any
life insurance company organized under this chapter and doing business in the
state shall have the power to hold in trust the proceeds of any life insurance
policy issued by it, upon such conditions as to revocation by the policyholder
and control by the beneficiary as are agreed upon by the policyholder and the
insurer.[§508.32, Iowa Code Ann.]
Premiums:
No
statutory provision.
Federal Election:
Not
allowed.[§60-2312, Kan. Gen. Stats.]
Life Insurance: Death Proceeds—
A
policy of insurance issued by a life insurance company or a beneficiary
certificate issued by a fraternal benefit society on the life of any individual
and payable at the death of the insured or in any given number of years to any
person or persons having an insurable interest in the life of the insured is
exempt from claims of the insured`s creditors or those of the person effecting
the insurance, both as to the proceeds and the reserves or present value thereof.[§40-414(a),
Kan. Gen. Stats.] However, this exemption does not apply to nonforfeiture
values if (1) the policyholder files a bankruptcy petition within one year
after obtaining the policy or (2) execution on judgment is obtained within one
year after the policy was issued and the debtor obtained the policy for the
purpose of defrauding one or more creditors.[§40-414(b), Kan. Gen. Stats.]
Endowment And Surrender Proceeds—
Exempt.[§40-414(a),
Kan. Gen. Stats.]
Group Insurance:—
No
specific statutory provision.
Fraternal, Etc., Insurance:
Payments
of fraternal benefit societies are exempt from claims of creditors of the
member or beneficiary and from all taxes.[§40-414(a), Kan. Gen. Stats.] See
also "Life Insurance," above.
Disability Benefits:
No
statutory provision.
Annuities:
No
statutory provision other than that relating to spendthrift trusts below.
Spendthrift Provisions: Trusts—
Kansas
has a general spendthrift trust statute not limited to insurance
contracts.[§58-2404, Kan. Gen. Stats.], and spendthrift trusts are held
valid.[Sherman v. Havens, 94 Kan. 654, 146 P. 1030]
Insurance Proceeds:
Proceeds
of life insurance policies and annuity contracts may be retained by the insurer
under an agreement with the policyholder, and such proceeds, together with
interest, shall not be liable for the debts of the beneficiary, where he is not
the policyholder.[§40-414a, Kan. Gen. Stats.] Note also the beneficiary`s
exemption contained in §40-414 which extends to bar all taxes, and claims and
judgments acquired by creditors, against the beneficiary.
Although
the proceeds of a life insurance policy were originally exempt from debts of
the beneficiary, and continued to be so when deposited in a bank account, when
they were subsequently invested in non-exempt property (stocks), they no longer
retained their exempt character.[Independence Savings & Loan Assn. v.
Sellers, 149 Kan. 652, 88 P.2d 1059]
Premiums:
No
statutory provision.
Federal Election:
Not
allowed.[KRS §427.170]
Life Insurance: Death Proceeds—
A
policy of insurance, effected by any person on his own life or on another`s
life, in favor of a person other than himself, shall be payable to the
beneficiary free from all liability for any debt of the insured or the
beneficiary existing at the time the policy is made available for his use.[KRS.
§304.14-300]
A
policy of insurance on the life of any person for the benefit of or payable to
any married woman, or to someone in trust for her, or a policy taken out by her
on the life of her husband or children, or against loss by his or their
disablement, shall inure to her benefit only, and that of her children,
independently of her husband or his creditors.[KRS. §304.14-340]
Endowment And Surrender Proceeds—
(1)
Any life insurer shall have power to hold the proceeds of any life or endowment
insurance or annuity contract issued by it upon such terms and conditions as
agreed to in writing by the insurer, and the insured or beneficiary. (2) The
provisions of the section shall not impair the rights of creditors under KRS §
§304.14-300 and 304.14-330.[KRS §304.14-350]
Group Insurance:
Proceeds
of group life insurance or group health insurance payable to the insured or
beneficiary are not liable, either before or after payment, for the debts of
any person having rights under the policy. This exemption does not extend to
credit group policy proceeds when applied to payment of the debt for which the
insurance was effected.[KRS §304.14-320]
Fraternal, Etc., Insurance:
Fraternal
benefit payments are exempt from creditors of the insured and of the
beneficiary, and assessment or cooperative life insurance proceeds are exempt
from creditors of the members.[KRS §304.29-181]
Disability Benefits:
Except
as otherwise provided by the policy or contract, the proceeds of all contracts
of health insurance and of provisions providing benefits because of the
insured`s disability which are supplemental to life insurance or annuity
contracts shall be exempt from all liability for any debt of the insured, and
from any debt of the beneficiary existing at the time the proceeds are made
available for his use.[KRS §304.14-310]
Annuities:
The
benefits, rights, privileges and options due or prospectively due an annuitant
are not subject to execution, nor shall the annuitant be compelled to exercise
his rights and amounts paid on any annuity with intent to defraud creditors,
and except that the exemption shall not attach to so much of the annuity
benefits as exceed $350 per month.[KRS §304.14-330]
Spendthrift Provisions: Trusts—
Estates
of every kind held in trust, except for spendthrift trusts created by the
settlor, are subject to the debts and charges of the beneficiaries of the
trust. However, even though a trust is a spendthrift trust, the interest of the
beneficiary is subject to an enforceable claim against the beneficiary by his
wife or child for support, for services rendered to the beneficiary, or for
Federal or Commonwealth taxes owed by him.[KRS §381.180]
Insurance Proceeds:
A
company may hold the proceeds of any life or endowment policy or annuity
contract with exemptions from legal process and claims of creditors of
beneficiaries other than the insured.[KRS §304.14-350]
Premiums:
Premiums
paid with intent to defraud creditors, with interest thereon, shall inure to
their benefit from the proceeds of the policy.[KRS §304.14-300]
Federal Election:
Not
allowed.[Title 13 §3881(B)(1) La. Rev. Stats.]
Life Insurance: Death Proceeds—
The
beneficiary, including the insured`s estate, of a life insurance or endowment
policy or annuity contract is entitled to the proceeds of the policy or
contract as against the creditors and representatives of the insured and of the
person effecting the policy or contract, and such proceeds are also exempt from
any debt of the beneficiary existing at the time the proceeds are made
available for his own use. This section applies whether or not the right to
change the beneficiary has been reserved, and whether or not the policy is
payable to the insured or his estate in the event the beneficiary should
predecease him.[Title 22, §647 La. Rev. Stats.]
Where
wife at the time of her death owned policies on life of husband who survived
her, wife was named primary beneficiary and her daughter the alternate
beneficiary, and right to change beneficiaries was granted to wife, cash
surrender value of policies was not "proceeds," and statutory
exemption for proceeds of policies in favor of beneficiary did not
apply.[Succession of Videau, App. 1967, 197 So.2d 655]
Endowment And Surrender Proceeds—
Exempt,
except for debts secured by a pledge of the policy, rights under an assigned
policy and advance payments made on or against a policy.[Title 22, §647 La.
Rev. Stat.]
Group Insurance:
Group
life insurance proceeds (except proceeds of debtor-group policies) payable to
the insured or any beneficiary thereunder are not liable, either before or
after payment, for any liability of any person having a right under the policy,
and if payable to the estate of the insured such proceeds do not constitute a
part of the estate for the payment of debts.[Title 22, §649, Rev. Stats.]
Fraternal, Etc., Insurance:
No
money, benefit, charity, relief or aid paid by any fraternal benefit society is
liable to legal or equitable process to pay any debt of a member, beneficiary
or person having a right thereunder, either before or after payment.[Title 22,
§564, Rev. Stats.]
Disability Benefits:
A
statute exempts the proceeds of contracts of health and accident insurance and
of provisions providing benefits on account of the insured`s disability that
are supplemental to life insurance or annuity contracts, from all liability for
any debt of the insured and any debt of the beneficiary existing at the time
the proceeds are made available for his use.[Title 22, §646, Rev. Stats.]
Annuities:
See
"Life Insurance" above.
Spendthrift Provisions: Trusts—
A
creditor may seize only the portion of the net annual income of a trust
beneficiary over $10,000 per year from all spendthrift trusts and from all
other trusts under which the alienation by beneficiary of his interest is
restricted.[Title 9, §2004, Rev. Stats.]
Despite
spendthrift stipulations in the trust instrument, a court may permit the
seizure of any portion of the beneficiary`s interest in the trust income and
principal, if the claim is based upon a judgment for: alimony or support for a
person the beneficiary is obligated to support; services rendered the
beneficiary or a legal dependent, or an offense or quasi-offense committed by
the beneficiary or person he is legally responsible for.[Title 9, §2005, Rev.
Stats.]
Insurance Proceeds—
A
settlor may create an inter vivos or a testamentary trust upon the proceeds of
life insurance.[Title 9, §1881, Rev. Stats.]
Premiums:
No
statutory provision.
Federal Election:
Not
allowed.
Life Insurance: Death Proceeds—
The
proceeds of any policy of life, accident, annuity or endowment insurance
acquired by any person on his own life or on another`s life, in favor of a
person other than himself, shall go to the lawful named beneficiary as against
the creditors and representatives of the insured, whether or not the right to
change the beneficiary is reserved, and whether or not the policy reverts to
the insured if the beneficiary dies first.[Ch. 24A- §2428, Rev. Stats.]
Where
the insured dies intestate and leaves a widow or issue, life insurance proceeds
payable to his estate are exempt from his creditors with the exception of
premiums paid for three years previous to his death.[Ch. 18- §853, Rev. Stats.]
A
separate statute exempts any unmatured life insurance (except for credit life
insurance) owned by the debtor, as well as $4,000 in dividends, interest and
loan values in any policy owned by the debtor under which the insured is the
debtor or a person of whom the debtor is a dependent.[Ch. 14- §4422, Rev.
Stats.]
Group Insurance:
The
proceeds of a group life insurance or group health insurance policy payable to
the individual insured or to the beneficiary are not liable to be applied to
pay any debt of such insured or his beneficiary or of any other person having a
right under the policy.[Ch. 24A- §2430, Rev. Stats.]
Fraternal, Etc., Insurance:
Money
or other benefits to be paid or provided by a fraternal benefit society are
exempt from the creditors of the certificate holder or of the beneficiary
either before or after payment by the society.[Ch. 24A- §4118, Rev. Stats.]
Disability Benefits:
The
proceeds of all contracts of health insurance and of provisions providing
benefits on account of the insured`s disability which are supplemental to life
insurance or annuity contracts shall be exempt from all liability for any debt
of the insured and from any debt of the beneficiary existing at the time the
proceeds are made available for his use.[Ch. 24A- §2429, Rev. Stats.]
Annuities:
The
benefits and privileges under any individual annuity contract shall not be
subject to execution nor shall the annuitant be compelled to exercise any
rights, powers or options he may have, nor may creditors interfere with or end
the contract; except as to amounts paid with intent to defraud creditors or as
to annuity payments which exceed $450 per month.[Ch. 24A- §2431, Rev. Stats.]
Spendthrift Provisions: Trusts—
No
statutory provision, but such trusts are held valid by state courts.[Cook v.
Stevens, 125 Me. 378, 134A. 195]
Insurance Proceeds:
No
case has been found dealing with a spendthrift trust clause in an insurance
policy.
Premiums:
The
amount of premium paid with the intent to defraud creditors will inure to their
benefit out of the proceeds.[Ch. 24A- §2428, Rev. Stats.] Also see "Life
Insurance " above.
Federal Election:
Not
allowed.
Life Insurance—
Proceeds,
including death benefits, cash surrender and loan values, premiums waived and
dividends of any life insurance policy or annuity contract made for the benefit
of or assigned to the spouse, children or dependent relatives of decedent, are
exempt from creditors. Policies pledged to creditors, however, are
excepted.[Art. 48A, §385, Ann. Code of Md.]
Group Insurance:
No
specific statutory provision.
Fraternal, Etc., Insurance:
Fraternal
benefit payments are exempt from creditors of the member and beneficiary.[Art.
48A, §328, Ann. Code of Md.]
Disability Benefits:
Exempt
except in action for necessaries contracted for after disability incurred.
Annuities:
See
"Life Insurance," above.
Spendthrift Provisions: Trusts—
No
statutory provision, but state courts uphold the validity of these
trusts.[Medwedeff v. Fisher, 179 Md. 192, 17 A.2d 141]
Insurance Proceeds—
A
spendthrift trust clause in a life insurance policy issued by an out-of-state
company has been held valid and enforceable.[Michaelson v. Sokalove, 169 Md.
529, 182 A. 458]
Premiums:
No
statutory provision.
Federal Election:
Allowed.
Life Insurance: Death Proceeds—
The
proceeds of any life or endowment insurance payable to or for the benefit of a
person other than the insured goes to the lawful beneficiary thereof as against
the creditors and representatives of the person effecting the insurance,
whether or not the right to change the beneficiary is reserved.[Ch. 175, §125,
Ann. Laws of Mass.]
A
further provision exempts the proceeds of every policy of life or endowment
insurance payable to or for the benefit of a married woman or her children,
except for the premiums paid in fraud of creditors.[Ch. 175, §126, Ann. Laws of
Mass.]
Endowment And Surrender Proceeds—
See
"Life Insurance" above.
Group Insurance:
Proceeds
of group insurance are exempt from creditors of the insured employee and of the
beneficiary as well.[Ch. 175, §135, Ann. Laws of Mass.]
Fraternal, Etc., Insurance:
Fraternal
benefit payments are exempt from claims of members and of their
beneficiaries.[Ch. 176, §22, Ann. Laws of Mass.]
Disability Benefits:
Disability
payments are exempt up to $400 per week during the period of disability, except
in an action to recover for necessities.[Ch. 175, §110A, Ann. Laws of Mass.]
Annuities:
No
statutory provision besides the one relating to group annuities above and to
spendthrift trusts below. Group annuities and any proceeds thereof are exempt
from the creditors of the annuitant, his beneficiary or any other person having
a right thereunder, except that an annuitant`s benefits can be seized to
satisfy a support order under Ch. 208, 209 or 273.[Ch. 175, §132C, Ann. Laws of
Mass.]
Spendthrift Provisions: Trusts—
Massachusetts
has no general statute dealing with spendthrift trusts, but its courts have led
in establishing the validity of such trusts.[Broadway National Bank v. Adams,
133 Mass. 170; Boston Safe Deposit and Trust Co. v. Collier (1916), 222 Mass.
390, 111 N.E. 163]
Insurance Proceeds—
If
under the terms of any annuity contract or policy of life insurance or any
supplemental written agreement the proceeds are to be retained by the insurer
at maturity, the payments are not subject to the debts of the beneficiary if
the agreement so provides.[Ch. 175, §119A, Ann Laws of Mass.]
Premiums:
Premiums
paid in fraud of creditors will inure to their benefit out of the proceeds.[Ch.
175, §125, Ann. Laws of Mass.]
Federal Election:
Allowed.
Life Insurance: Death Proceeds—
The
proceeds of any policy of life or endowment insurance payable to the wife,
husband or children of the insured or to a trustee for their benefit, including
the cash value thereof, are exempt from execution or liability to any creditor
of the insured, and the exemption is applicable, whether such persons were
named as beneficiaries when the policy was originally issued or later through a
beneficiary change or assignment of the policy.
The
section further provides that proceeds, including the cash value thereof, of
any insurance policy or annuity contract, effected by any person on his own
life or on that of another, in favor of a person other than himself, are exempt
from the claims of creditors of the insured, whether or not the policy is made
payable to the insured in the event the beneficiary predeceases the insured,
and whether or not the right to change the beneficiary was reserved.[§24.12207,
Mich. Stats. Ann.]
Another
section of the statutes states that insurance proceeds carried by a married
woman upon the life of her husband, or any other person, pass to her free from
the creditors of the insured where the annual premium does not exceed $300. If
she should die before her husband, the insurance may be made payable after her
death to her children or their guardian, if under age, or it may be disposed of
by her will.[§24.12209, Mich. Stats. Ann.]
A
creditor named as beneficiary in an insurance policy on the life of his debtor
is entitled only to reimbursement to the extent of his security interest in the
policy.[Balcer v. Peters, 37 Mich. App. 492]
Endowment And Surrender Proceeds—
The
cash surrender value of a policy of insurance on the life of the husband,
payable to the wife, is exempt from the claims of insured`s creditors in
bankruptcy.[In re Bendall, 28 F.2d 999] Also see "Life Insurance"
above.
Group Insurance:
No
specific statutory provision.
Fraternal, Etc., Insurance:
Payments
of fraternal benefit societies are exempt from creditors of the certificate
holder and beneficiary.[§24.18181, Mich. Stats. Ann.]
Disability Benefits:
Exempt
from levy and sale under any execution are any moneys or other benefit paid,
provided or allowed by any stock or mutual life or health or casualty insurance
company on account of the disability due to injury or sickness of any insured
person, whether debt or liability of such insured or beneficiary was incurred
before or after the accrual of benefits under insurance policies.[§27A. 6023,
Mich. Stats. Ann.]
Annuities—
See
"Life Insurance" above and "Trusts" below.
Spendthrift Provisions: Trusts—
Michigan
by statute protects the income from a trust of lands to the extent needed for
the education and support of the trust beneficiary and makes such income
nonassignable.[§ §26.63 and 26.69, Mich. Stats. Ann.] The courts uphold such
spendthrift trusts.[Rose v. Southern Michigan National Bank, 255 Mich. 275, 238
N.W. 284]
Insurance Proceeds—
Where
agreed to in writing between the policyowner and insurer, proceeds of life
insurance, endowment or annuity contracts are exempt from claims of the
beneficiaries creditors.[§24.14054, Mich. Stats. Ann.]
Premiums:
Premiums
paid in fraud of creditors inure to their benefit.[§24.12207, Mich. Stats.
Ann.]
Federal Election:
Allowed.
Life Insurance: Death Proceeds—
All
monies received by, or payable to, a surviving spouse or child from insurance
on the life of the spouse or parent are exempt from attachment in an amount not
exceeding $32,000. This $32,000 exemption is increased by $8,000 for each
dependent of the surviving spouse or child.[§550.37, Minn. Stats. Ann.] Such
amounts are indexed for inflation. This section applies only to creditors of
the beneficiary.[Pauling v. Pauling, 159 F.2d 531]
Endowment And Surrender Proceeds—
Endowment
policies are held to come within §550.37. The cash value of a policy on the
life of a bankrupt, and payable to a named beneficiary, is exempt from claims
of creditors in the bankruptcy proceedings, even though the right to change the
beneficiary has been reserved.[Ralph v. Cox, 1 F.2d 435]
A
separate statute exempts the insured`s aggregate interest not to exceed $6,400
in any accrued dividends, interest or loan value of a policy owned by the
debtor under which the insured is the debtor or a person of whom the debtor is
a dependent.[§550.37(23) Minn. Stats. Ann.]
Group Insurance:
No
specific statutory provision.
Fraternal, Etc., Insurance:
Fraternal
benefit payments are exempt from claims of creditors of the certificate holder
and the beneficiary.[§64B.18 and §550.37.11, Minn. Stats. Ann.]
Disability Benefits:
The
net amount payable to any insured or to any beneficiary under any policy of
accident or disability insurance is exempt and free from claims of creditors of
the insured or the beneficiary.[§550.39, Minn. Stats. Ann.]
Annuities:
No
provision other than that relating to spendthrift trusts below. The death
payment under a retirement annuity has been held not to be life insurance for
purposes of the above statutes.[In re Walsh, 19 F. Supp. 567]
Spendthrift Provisions: Trusts—
The
income from a trust of lands is protected to the extent needed for the
education and support of the trust beneficiary and such income is
nonassignable.[§ §501.14, 501.20, Minn. Stats. Ann.] The courts uphold
spendthrift trusts.[First National Bank of Canby v. Olufson, 181 Minn. 289, 232
N.W. 337; In re Moulton`s Estate, 233 Minn. 286, 46 N.W. 2d 667]
Insurance Proceeds—
Insurance
or annuity proceeds held under a spendthrift trust are exempt from claims of
beneficiaries` creditors where such agreement is contained in the terms of the
policy. Where policies of insurance provide for payments in installments a
provision may be included which prohibits the beneficiary from commuting,
changing the time of payment or amount of installments, surrendering for cash,
borrowing against or assigning the policy for any purpose.[§61A.04, Minn.
Stats. Ann.]
Premiums:
All
premiums paid for insurance in fraud of creditors, with interest thereon, shall
inure to their benefit from the proceeds of the policy if the company is
notified in writing before payment.[§61A.12, Minn. Stats. Ann.]
Federal Election:
Not
allowed.[§85-3-2, Miss. Code Ann.]
Life Insurance: Death Proceeds—
The
proceeds of a life policy, including cash and loan values, inure to the
beneficiaries named in the policy free from liability for the insured`s debts,
even though the insured paid the premiums thereon. The exemption does not apply
to the portion of the cash surrender value and loan values of a life policy
exceeding $50,000 as a result of premiums paid within 12 months after issuance
of a writ of seizure, attachment, garnishment or filing of an involuntary or
voluntary bankruptcy proceeding.[§85-3-11, Miss. Code Ann.]
Further,
the proceeds of a life policy, not exceeding $50,000, payable to the insured`s
executor or estate, inure to the heirs and legatees, free from liability for
the insured`s debts, except premiums paid by someone other than the insured and
expenses of last illness and burial, but if the deceased has other insurance
for the benefit of his heirs or legatees, the sum they receive under the
policies directly payable to them is deducted from this $50,000 figure and only
the excess is exempt.[§85-3-13, Miss. Code Ann.]
The
exemption of death proceeds is against the debts of the insured, and creditors
of the wife, under a joint judgment against the insured and the wife, can
recover against the proceeds in the wife`s hands.[Goza v. Provine, 140 Miss.
315, 105 So. 534.]
Endowment And Surrender Proceeds—
The
cash surrender value of a policy is exempt from claims of creditors in
bankruptcy.[Dreyfus v. Burton, 98 Miss. 758, 54 So. 254] See also "Life
Insurance," above.
Group Insurance:
No
specific statutory provision.
Fraternal, Etc., Insurance:
Fraternal
benefit payments are exempt from the claims of creditors of the member or the
beneficiary.[§83-29-39, Miss. Code Ann.]
Disability Benefits:
Income
from disability insurance is exempt from garnishment or other legal
process.[§85-3-1, Miss. Code Ann.]
Annuities:
See
provisions relating to "spendthrift insurance proceeds" below.
Spendthrift Provisions: Trusts—
There
is no general statute authorizing spendthrift trusts, but such trusts are
apparently upheld by courts.[Calhoun v. Markow, 168 Miss. 556, 151 So. 547]
Insurance Proceeds—
Proceeds
of life insurance or annuity contracts retained by the insurer are not subject
to commutation, anticipation, encumbrance, alienation or assignment by the
beneficiary if such permission is expressly withheld by the terms of the
contract policy, or supplementary agreement. Payments of interest or principal
are exempt from claims of the beneficiary`s creditors and exempt from any
judicial processes of levy and attachment, if the contract so
provides.[§83-7-5, Miss. Code Ann.]
Premiums:
Under
previous version of statute, creditors were entitled out of excess of insurance
policy over $10,000 to amount paid for premiums on entire policy while insured
was insolvent, but not to whole amount of excess to satisfy their
debts.[Johnson v. Bacon, 92 Miss. 156, 45 So. 858]
Federal Election:
Not
allowed.[§513.427 V.A.M.S.]
Life Insurance: Death Proceeds—
Any
married woman may insure the life of her husband for her own benefit, and if
she survives him the proceeds are free from the husband`s debts; provided the
premiums were paid from her own funds. If she predeceases her husband, the
insurance is paid to her heirs, unless otherwise stipulated in the
policy.[§376.530 and 376.540 V.A.M.S.] Any unmarried woman may insure the life
of her father or brother, with the same protection.[§376.550, V.A.M.S.]
Endowment And Surrender Proceeds—
Any
unmatured life insurance contracts, other than credit life, are exempt. Accrued
dividends, interest and loan values are exempt up to $5,000. There is no
exemption if the debtor purchased the policy within six months before
bankruptcy.[§ §513.430(7),(8) V.A.M.S.]
Group Insurance:
No
specific statutory provision.
Fraternal, Etc., Insurance:
Same
as for endowment and surrender proceeds. Proceeds of insurance payable to
policyholder or beneficiary under a stipulated premium plan or assessment
contract are exempt from the creditors of both the beneficiary and the
policyholder.[§377.090, 377.330 V.A.M.S.]
Disability Benefits:
Exempt.[§513.430(10)(c)
V.A.M.S.]
Annuities:
No
statutory provision.
Spendthrift Provisions: Trusts—
Spendthrift
trusts are held valid by state courts. But a statute provides that spendthrift
trust provisions will not prevail against claims of wife or children of a
beneficiary for support and maintenance.[§456.080, V.A.M.S.]
Only
the income of a spendthrift trust is not protected against claims of child or
beneficiary, and the corpus is protected and is not subject to garnishment in
aid of execution on judgment for support of child of beneficiary.[Brant v.
Brant, 273 S.W.2d 734]
Insurance Proceeds—
No
statutory provision has been found dealing with a spendthrift clause in an
insurance policy.
Premiums:
No
statutory provision.
Federal Election:
Not
allowed.[§31-2-106, Revised Code of Mont.]
Life Insurance: Death Proceeds—
A
named beneficiary or assignee, other than the policyowner, shall be entitled to
the proceeds against the creditors or representatives of the insured and of the
person effecting the insurance, whether or not the right to change the
beneficiary is reserved.[§33-15-511, Revised Code of Mont.]
Endowment And Surrender Proceeds—
Exempt
if annual premiums do not exceed $500.[§25-13-616, Revised Code of Mont.]
Group Insurance:
(1)
The proceeds payable to the insured or beneficiary thereunder shall not be
liable, either before or after payment, for any debts of insured or
beneficiary. (2) This shall not apply to group life insurance effected for the
purpose of covering a debt or obligation.[§33-15-512, Revised Code of Mont.]
Fraternal, Etc., Insurance:
Fraternal
benefit payments are exempt from creditors of the member, beneficiary or any
person having an interest therein.[§33-7-522, Rev. Code of Mont.]
Disability Benefits:
The
proceeds of all disability insurance policies and disability benefits which are
supplemental to life insurance or annuity contracts are exempt from debts of
the insured or the beneficiary existing at the time the proceeds become
available.[§33-15-513, Revised Code of Mont.]
Annuities:
(1)
Benefits, rights, privileges and options due the annuitant shall not be subject
to execution nor shall annuitant be compelled to exercise any such rights,
powers or options, nor shall creditors be allowed to interfere with or
terminate the contract. The total exemption of benefits, however, shall not
exceed $250 per month, and such periodic payments in excess of $250 per month
shall be subject to garnishment. If such payments exceed $250 a court may order
the annuitant to make payments to the judgment creditor. (2) The same
exemption, with the same exceptions, applies to a beneficiary or
assignee.[§33-15-514, Rev. Code of Mont.]
Spendthrift Provisions: Trusts—
No
statutory provision.
Insurance Proceeds:
No
case has been found concerning spendthrift trust provisions in life insurance
policies.
Premiums:
Any
premiums paid with intent to defraud creditors will inure to such creditors`
benefit from proceeds of the policy.[§33-15-511, §33-15-514, Rev. Code of
Mont.]
Federal Election:
Not
allowed.[§25-15-105, Rev. Stats. Neb.]
Life Insurance: Death Proceeds—
All
proceeds, cash values and other benefits accruing under any annuity contract or
any policy or certificate of life insurance payable to a beneficiary other than
the estate of the insured, and under any health and accident policy, are not
subject to attachment, garnishment or other legal or equitable process and are
exempt from claims of creditors of the insured or beneficiary, if the
beneficiary is related to the insured by blood or marriage, in the absence of a
written agreement or assignment to the contrary.[§44-371, Rev. Stats. Neb.]
This does not apply to loan values in excess of $10,000.
Endowment And Surrender Proceeds—
See
above.
Group Insurance:
No
specific statutory provision.
Fraternal, Etc., Insurance:
Fraternal
benefits are exempt from creditors of the member or beneficiary. This does not
apply to loan values in excess of $10,000.[§44-1089, Rev. Stats. Neb.]
Disability Benefits:
No
statutory provision.
Annuities:
See
"Life Insurance" above.
Spendthrift Provisions: Trusts—
State
courts hold spendthrift trusts valid.[Weller v. Noffsinger, 57 Neb. 455, 77
N.W. 1075]
Insurance Proceeds—
A
life insurance company may pay in installments amounts which become due to
beneficiaries under a policy. If such beneficiary shall die before all
installments are paid, the policy may provide to whom the remaining ones shall
be paid.[§44-370, Rev. Stats. Neb.]
Premiums:
Where
a partner uses misappropriated funds from the partnership business to pay
premiums on his personal life insurance, the proceeds at his death are
available to his creditors.[Mullikin v. Pedersen, 161 Neb. 22, 71 N.W.2d 485]
Federal Election:
Not
allowed.[§21.090(3), NRS]
Life Insurance: Death Proceeds—
Exempt
from execution are all moneys or benefits in any manner growing out of any life
insurance where the premiums do not exceed $1,000 annually. If the premiums
exceed this amount, the proceeds are exempt only in the proportion which $1,000
a year bears to the annual premiums paid.[§21.090(i)(k), NRS]
Further,
all proceeds payable because of the death of the insured and annuity contracts
payable to a beneficiary are exempt from the claims of insured`s or
beneficiaries` creditors, whether or not the power to change the beneficiary is
reserved.[§687B.260, NRS]
Where
will of deceased, who was separated from his wife, left all of his property to
stranger who was to provide for his son, and his only estate consisted of
proceeds of insurance policy payable to his executors, court ordered case
remanded to trial court, which had found that will created trust for son, with
instructions to set aside insurance proceeds to widow and son under (NRS
146.020) providing that judge may set aside to decedent`s family all personal
property which is exempt by law from execution, and (NRS 21.090).[Lavendol`s
Estate, 46 Nev. 181, 209 Pac. 237]
Endowment And Surrender Proceeds:
See
"Life Insurance" above.
Group Insurance:
Proceeds
of a policy of group life or group health insurance payable to individual
insured or beneficiary thereof are exempt from the claims of creditors of
insured or beneficiary.[§687B.280, NRS]
Fraternal, Etc., Insurance:
Benefits
paid by a fraternal society are not liable to attachment or other legal process
by creditors of a member or beneficiary.[§695A. 220, NRS]
Disability Benefits:
Proceeds
of contracts of health and disability insurance payable to the insured or the beneficiary
are exempt from the claims of creditors of the insured or beneficiary.[§687B.
270, NRS]
Annuities:
See
"Life Insurance" above. Also, the proceeds of an annuity contract are
exempt from the claims of creditors except as to amounts paid for premiums with
the intent to defraud creditors and benefits exceeding $350 per month.[§687B.
290, NRS]
Spendthrift Provisions: Trusts—
Nevada
has a comprehensive spendthrift trust statute which prohibits and restrains the
beneficiary generally from the assignment, alienation, acceleration and
anticipation of any interest of the beneficiary under the trust, and such
interest is free from creditor`s claims.[§166.120, NRS]
Insurance Proceeds—
There
is no statute specifically dealing with a spendthrift trust clause in an
insurance policy, but see the provisions of section 21.090 above.
Premiums:
Premiums
for insurance paid with the intent to defraud creditors, with interest thereon,
shall inure to their benefit from the proceeds of the policy.[§687B.260, NRS]
Federal Election:
Not
available.
Life Insurance: Death Proceeds—
If
a policy of life or endowment insurance is effected by any person on his own
life or on another`s life, in favor of a person other than himself having an
insurable interest therein, the lawful beneficiary thereof other than himself
or his legal representatives is entitled to it proceeds against all creditors
of the person effecting the same.[§408.2, N.H. Rev. Stats. Ann.]
All
policies of life or endowment insurance made payable to or for the benefit of a
married woman, or to any person in trust for her or for her benefit, whether
procured by herself, her husband or by any other person, inure to her separate
use and benefit and to that of her children.[§408.1, N.H. Rev. Stats. Ann.]
Policies
in which the right to change the beneficiary has been reserved are within the
exemption statute.[In re Whelpley, 169 F. 1019; Barbin v. Moore, 85 N.H. 362,
159 A. 409]
Endowment And Surrender Proceeds—
The
cash values of an endowment policy are not exempt in a bankruptcy proceeding;
only the proceeds in case of death are exempt.[In re Bray, 8 F. Supp. 761] See
also "Life Insurance" above.
Group Insurance:
No
specific statutory provision.
Fraternal, Etc., Insurance:
Fraternal
benefit payments are exempt from the claims of creditors of the member or the
beneficiaries.[§418.24, N.H. Rev. Stats. Ann.]
Disability Benefits:
No
statutory provision.
Annuities:
No
statutory provision.
Spendthrift Provisions:
There
is no statutory provision for spendthrift trusts, and such trust provisions
have been held effective to protect against claims of creditors.[Brahmey v.
Rollins, 87 N.H. 290, 179A. 186; Athorne v. Athorne, 100 N.H. 413, 128, A.2d
910] But the income of a discretionary trust is inalienable and cannot be
reached by the beneficiary`s creditors.[Eaton v. Eaton, 82 N.H. 216, 132A. 10;
Duncan v. Elkins, 94 N.H. 13, 45 A.2d 297]
Insurance Proceeds—
No
case has been found dealing with a spendthrift clause in a life insurance
policy.
Premiums:
Premiums
paid in fraud of creditors inure to their benefit out of the proceeds.[§408.2
and §408.3, N.H. Rev. Stats. Ann.]
Federal Election:
Allowed.
Life Insurance: Death Proceeds—
The
proceeds of any policy of life insurance effected by any person on his own life
or on another`s life in favor of a person other than himself, shall go to the
lawful beneficiary thereof as against the creditors and representatives of the
person effecting the insurance.[§17B:24-6 N.J. Stats. Ann.]
Endowment And Surrender Proceeds—
Under
previous statutes with provisions similar to those under "Life
Insurance" above, exemptions applied also to endowment policies.[Slurzberg
v. Prudential Ins. Co., 15 N.J. Misc. Rep. 423, 192 A. 451] The cash value of a
policy payable to the wife of the insured is exempt in bankruptcy proceedings,
even though the right to change the beneficiary has been reserved.[Smith v.
Metropolitan Life Ins. Co., 43 F.2d 74] and even though premiums have been paid
in fraud of creditors.[Greiman v. Metropolitan Life Ins. Co., 96 F.2d 823,
cert. denied, 305 U.S. 606]
Group Insurance:
The
proceeds of a policy of group life or group health insurance payable to the
individual insured or the beneficiary are not liable to pay any debt or
liability of such insured or his beneficiary except in an action to recover for
necessaries contracted for after the beginning of the disability.[§17B:24-9,
N.J. Stats. Ann.]
Fraternal, Etc., Insurance:
Fraternal
benefit payments are exempt from claims of creditors of the certificate holder
or beneficiary, or any person having a right thereunder.[§17:44A-19, N.J.
Stats. Ann.]
Disability Benefits:
Benefits
paid by any stock or mutual life, health or casualty insurance company on
account of the disability from injury or sickness of any insured person are
exempt from the claims of creditors of the insured, except in an action to
recover for necessaries and except premiums paid in fraud of
creditors.[§17B:24-8, N.J. Stats. Ann.]
Annuities:
The
benefits due or prospectively due an annuitant under an annuity contract are
exempt from the claims of creditors, except as to amounts paid with intent to
defraud creditors and amounts exceeding $500 per month.[§17B:24-7, N.J. Stats.
Ann.]
Spendthrift Provisions: Trusts—
Income
from a trust up to $48 per week is exempt from the claims of creditors, but a
court may order a portion of income over this amount be paid by the debtor to
his creditors.[§2A:17-50, 51, N.J. Stats. Ann.]
Insurance Proceeds:
Any
life insurer shall have the power to hold under agreement the proceeds of any
policy issued by it, upon such terms and restrictions as to revocation by the
policyholder and control by beneficiaries, and with such exemptions from the
claims of creditors of beneficiaries other than the policyholder as set forth
in the policy or as agreed to in writing by the insurer and the policyholder.
Upon maturity of a policy, in the event the policyholder has made no such
agreement, the insurer shall have the power to hold the proceeds of the policy
under an agreement with the beneficiaries.[§17B:24-10, N.J. Stats. Ann.]
Premiums:
The
amount of any premiums for insurance paid with intent to defraud creditors,
with interest thereon, shall inure to their benefit from the proceeds of the
policy.[§17B:24-6 N.J. Stats. Ann.]
Federal Election:
Allowed.
Life Insurance: Death Proceeds—
The
proceeds of any life insurance shall not be subject to the debts of the
insured, except by special contract in writing.[§42-10-3, N. Mex. Stats. Ann.]
Endowment And Surrender Proceeds—
The
cash surrender value of any life insurance policy and the withdrawal value of
any optional settlement or annuity contract or deposit with any life company,
and any installment benefits from any life, accident or health policy or
annuity contract issued upon the life of a citizen or resident of New Mexico,
are exempt from (1) creditors of the person whose life is insured, and (2)
creditors of any person protected by the contract or to receive any benefit
from it, whether or not the right to change the beneficiary is reserved, unless
the contract is taken out, made or assigned in writing for the benefit of the
creditor.[§42-10-3, N. Mex. Stats. Ann.]
Group Insurance:
No
specific statutory provision.
Fraternal, Etc., Insurance:
Payments
of a fraternal benefit society are exempt from creditors of the member, the
beneficiary and any other person having a right thereunder.[§59A-44-18, N. Mex.
Stats. Ann.]
Disability Benefits:
See
"Endowment and Surrender Proceeds" above.
Annuities:
See
"Endowment and Surrender Proceeds" above.
Spendthrift Provisions: Trusts—
No
statutory provision. No cases on the subject have been found.
Insurance Proceeds—
Proceeds
held under a settlement option are exempt.[§42-10-3, N. Mex. Stats. Ann.]
Premiums:
No
statutory provision.
Federal Election:
Not
allowed.[N.Y. Debt. & Cred. Law §282]
Life Insurance: Death Proceeds—
The
proceeds of life insurance policies are exempt from the claims of (1) Creditors
of the insured, where the insured makes the policy payable to some other person
as a beneficiary either in the original beneficiary designation or by a change
of beneficiary, assignment of the policy, or otherwise; (2) Creditors of the
insured, where a person takes out insurance on the life of some other party in
favor of himself as either the original beneficiary or later by assignment or
change of beneficiary; and where a wife takes out insurance on the life of her
husband. The proceeds are also exempt from the creditors of the wife; (3)
Creditors of both the insured and the person effecting the insurance, where one
person takes out a policy on the life of another and makes a third party the
beneficiary either in the original designation or by later assignment, change
of beneficiary, or otherwise.
The
exemption applies not only to claims of creditors in the literal sense of the
word, but includes the claims of personal representatives, trustees in
bankruptcy, and receivers in state and federal courts.
Proceeds
include death benefits, cash surrender values and loan values, premiums waived,
and dividends (except where the debtor has, after issuance of the policy,
elected to receive dividends in cash).
The
exemption applies whether or not the right to change the beneficiary has been
reserved and whether or not the policy is payable to the insured if the
beneficiary, assignee, or payee dies first.
A
policy is considered payable to a beneficiary entitled to the exemption if a
facility-of-payment clause or similar clause permits the company to discharge
its obligations by making payments to an exempt beneficiary.[Insurance Law
3212(b)]
Assignments,
changes of beneficiary, and other transfers are valid unless made with actual
intent to defraud creditors.[Insurance Law, §3212(e)(1).]
Endowment And Surrender Proceeds—
See
"Life Insurance" above.
Group Insurance:
The
exemptions set out under "Life Insurance" above apply also to group
insurance and group annuity contracts.
Fraternal, Etc., Insurance:
Policies
of fraternal benefit societies, and the contracts of co-operative life and
accident insurance companies, are entitled to the benefit of the exemptions set
out under "Life Insurance" above.
Disability Benefits:
Disability
benefits are exempt from all debts of the insured, except (1) in an action for
necessaries furnished after the commencement of the disability, and (2) with
respect to all other debts incurred since the commencement of disability the
exemption shall not be in excess of $400 per month. Where the payment is in a
lump sum for dismemberment or other specific loss, the lump sum payment shall
be entirely exempt.[Insurance Law §3212(f)]
Annuities:
Benefits
due under an annuity contract, where the annuitant paid the consideration for
the contract, are exempt from execution; except that such benefits may be
subjected to creditors in an amount, if any, deemed proper by the court, with
due regard to the reasonable requirements of the judgment debtor and his
family, if dependent upon him.[Insurance Law §3212(d) above] The exemption is
limited to $5,000 for contracts that were purchased within six months of the
filing of a petition for bankruptcy and were not purchased with the proceeds of
an earlier annuity contract.[Debt. & Cred. Law §283]
Spendthrift Provisions: Trusts—
The
right of a beneficiary of an express trust to receive the income from property
and apply it to the use of or pay it to any person may not be transferred by
assignment or otherwise, unless a power to transfer such right is conferred
upon such beneficiary by the instrument creating the trust.[Estates, Powers and
Trusts Law, §7-1.5] The beneficiary of such a trust may, unless prohibited by
the instrument creating the trust, transfer any amount in excess of an annual
income of $10,000 from the trust to his spouse, issue, ancestors, brothers,
sisters, uncles, aunts, nephews or nieces. The instrument must be made in
writing and without consideration.
Insurance Proceeds—
The
proceeds of a life insurance policy which, under a trust or other agreement,
are upon the death of the insured left with the insurance company may not be
(A) transferred, (B) subject to commutation or encumbrance or (C) subject to
legal process except in an action for necessaries, if provisions to such effect
were incorporated in such trust or other agreement.[EPTL, §7-1.5]
Premiums:
Premiums
paid in fraud of creditors, with interest, are subject to their
claims.[Insurance Law, §3212.130] Mere payment of premiums by insured debtor
who was insolvent or rendered insolvent thereby and who allegedly made such
payments with actual intent to delay, hinder and defraud his creditors
constituted ground for recovery by creditors of amount of such premiums, even
if decedent had made no assignment or change of beneficiary or transfer of
policies.[U.S. v. Bushlow, 832 F. Supp 574]
Federal Election:
Not
allowed.[§1C-1601(f) N.C. Gen. Stat.]
Life Insurance: Death Proceeds—
The
North Carolina Constitution.[Art. 10, §7] provides that a person may insure his
or her own life for the sole use and benefit of his or her spouse and children,
and in case of the death of the insured the amount thus insured is paid over to
the spouse and children, or to the guardian, free from all claims of creditors.
And the policy is not subject to claims of the insured`s creditors during his
or her life if the insurance issued is for the sole use and benefit of the
spouse and/or children.
The
proceeds of insurance effected by any person on his own life or on another`s
life, in favor of a person other than himself, go to the lawful beneficiary
thereof, other than the person effecting the insurance or his legal
representatives, free from claims of creditors of the insured and the person
effecting such insurance, whether or not the policy is made payable to the
insured in the event of the beneficiary`s predecease and even though the
insured reserves the right to change beneficiary.
Further,
every policy of life insurance made payable to or for the benefit of a married
woman, or to any person in trust for her or for her benefit, whether procured
by herself, her husband, or by any other person, inures to her separate use and
benefit and to that of her children if she dies in his lifetime.[§58-58-95,
N.C. Gen. Stats.]
Endowment And Surrender Proceeds—
The
word "proceeds" when used in life insurance exemption statutes
includes the protection of cash surrender values and other values built up
during the life of the policies. A trustee in bankruptcy is not entitled to the
cash surrender value of a life insurance policy in which the wife is the
named beneficiary notwithstanding the insured (bankrupt) has reserved the right
to change the beneficiary.[Art.10, §5, North Carolina Constitution]
Group Insurance:
Proceeds
of group insurance are exempt from claims of creditors of the insured-employee
and of the beneficiary.[§58-165, N.C. Gen. Stats.]
Fraternal, Etc., Insurance:
Fraternal
benefit payments are exempt from creditors of the members and their
beneficiaries.[§58-24-85, N.C. Gen. Stats.]
Disability Benefits:
No
specific provision. If the debtor so elects, disability payments up to $500 per
month are exempt under Art. 10, Sec. 1 and 5 of the North Carolina
Constitution.
Annuities:
No
statutory provision.
Spendthrift Provisions: Trusts—
A
general statute provides for conveyance of property which does not yield at
time of conveyance a clear annual income exceeding $500 in trust for child,
grandchild or relative of grantor for period measured by life of beneficiary,
income to be used for support and maintenance of beneficiary, and same shall be
free from claims of beneficiary`s creditors.[North Carolina Constitution, Art.
10 §1] Spendthrift provisions in trust generally enforced.[§36A-115, N.C.Gen.
Stats]
Insurance Proceeds—
No
case has been found dealing with spendthrift trust provisions in insurance
policies.
Premiums:
Premiums
paid in fraud of creditors, with interest, inure to their benefit.[§58-115,
N.C. Gen. Stats.]
Federal Election:
Not
allowed.[§28-22-17, N.D. Cent. Code]
Life Insurance: Death Proceeds—
The
proceeds of a life policy or of a contract payable by any mutual aid or
benevolent society, payable to the personal representative of the insured, his
heirs or estate, upon his death, shall not be subject to his debts except by
special contract, but shall be inventoried and distributed to the heirs or
legatees.[§26.1-33-40, N.D. Cent. Code]
Endowment And Surrender Proceeds—
The
surrender value of any policy of life insurance payable on the insured`s death
to his wife, children or dependent relative, is exempt from the claims of the
insured`s creditors up to $200,000 in accrued dividends, interest or cash
value.[§28-22-03.1(3) N.D. Cent. Code]
Group Insurance:
No
specific statutory provision.
Fraternal, Etc., Insurance:
Fraternal
benefit society payments are exempt from claims of creditors of the member, the
beneficiary or any other person having thereto.[§26.1-15-32, N.D. Cent. Code]
See "Life Insurance," above.
Disability Benefits:
No
statutory provision.
Annuities:
No
statutory provision.
Spendthrift Provisions: Trusts—
Where
the trust contains no direction for the accumulation of surplus, the rents and
profits beyond the sum necessary for education and support of the beneficiary
are not exempt from claims of the beneficiary`s creditors. The beneficiary of a
trust for the receipt of rents and profits of real property, or for the payment
of an annuity out of such rents and profits, may be restrained from disposing
of his interest for his lifetime or for the period of years created by the
trust.[§59-03-10 and §59-03-18, N.D. Cent. Code]
Insurance Proceeds—
A
trustee may be designated by a will, with benefits or rights payable or
transferable to the trustee upon admission of the will to probate. Such death
benefits shall be payable to the trustee and held by him according to the terms
of the testamentary trust created by will. Payments of such benefits shall not
be included in the estate, nor subject to the claims of creditors.[§26.1-33-42,
N.D. Cent. Code]
Premiums:
No
statutory provision.
Federal Election:
Not
allowed.[Ohio Code §2329.662]
Life Insurance: Death Proceeds—
All
contracts of life or endowment insurance or annuities upon the life of any
person or any interest therein, which are payable to, or for the benefit of,
the spouse, children, dependent relative or creditor of the insured, are held,
subject to a change of beneficiary if desired, free and clear from all claims
of the creditors of such insured person or annuitant.[Ohio Code §3911.10]
Further,
a married person may, individually and in such person`s own name, or in the
name of a third person with assent as the third person`s trustee, cause the
life of the person`s spouse to be insured for such person`s sole use, for any
definite period or for the term of such spouse`s life, and, if any person
obtaining such insurance survives such period or term, the insurance is payable
to such person free from the claims of the representatives and creditors of
such spouse.[Baldwin`s Ohio Revised Code, §3911.11] And a policy of insurance
on the life of any person, or any interest therein, assigned, transferred or
made payable to a married person or to any person, firm or corporation in trust
for such married person (or for the benefit thereof), whether made by the
spouse of such married person or another, shall inure to the benefit of such
married person independently of the spouse of such married person or the
spouse`s creditors, or the person effecting or transferring the policy, or his
or her creditors.[Ohio Code, §3911.12]
Endowment And Surrender Proceeds—
See
"Life Insurance" above.
Group Insurance:
Proceeds
are exempt from the claims of creditors of the member or his beneficiary.[Ohio
Code, § §2329.66(A)(6)(c), 3917.05]
Fraternal, Etc., Insurance:
Fraternal
benefit society payments are exempt from creditors of the beneficiary and the
member. Funds of a benevolent association, to the amount of $5,000, payable to
the family of a deceased member are exempt from his debts.[Ohio Code, §3921.18]
Disability Benefits:
Disability
benefits of sickness and accident policies not exceeding $600 per month are
exempt from claims of the insured`s creditors, except in an action to recover
for necessaries contracted for during the period of disability. Lump sum
payments because of a dismemberment or other loss are exempt from the insured`s
creditors.[Ohio Code, §3923.19]
Annuities:
See
"Life Insurance" above and also section on spendthrift trusts below.
Spendthrift Provisions: Trusts—
A
general statute makes available to a judgment creditor the debtor`s equitable
interest in any real property or his interest in any chose in action.[Ohio
Code, § §2333.01, 3911.14]
Insured Proceeds:
A
statute specifically relating to insurance provides that proceeds or payments
under life, endowment or annuity contracts held in trust by the insurer shall
possess such exemptions from creditors of beneficiaries other than the insured
as are agreed upon by the insurer and the insured or beneficiary.[Ohio Code,
§3911.10]
Premiums:
The
amount of any premiums paid in fraud of creditors, with interest, inures to the
benefit of the creditors from the proceeds.[Ohio Code, §3911.10]
Federal Election:
Not
allowed.[Title, 31 §1, Okla. Stats. Ann.]
Life Insurance: Death Proceeds—
The
proceeds of a policy of insurance effected by any person go to the named
beneficiary free from claims of creditors of the person effecting the
insurance. The right to change the beneficiary does not defeat the
exemption.[Title 36, §3631.1, Okla. Stats. Ann.]
Endowment And Surrender Proceeds—
Where
wife of bankrupt was beneficiary of life endowment policy of bankrupt and wife
had filed petition in bankruptcy, cash surrender value of policy was not vested
property interest and was not asset of bankrupt wife.[In re Privett, 435 F.2d
261]
Group Insurance:
A
policy of group insurance either before or after payment and whether it be
payable to the insured or to a beneficiary, is exempt from the creditors of the
insured and beneficiary. Where there is a facility-of-payment clause, the
proceeds do not become a part of the insured`s estate.[Title 36, §3632, Okla.
Stats. Ann.]
Fraternal, Etc., Insurance:
Fraternal
benefit association payments are exempt from claims of creditors of the member
and the beneficiary, and mutual benefit or assessment insurance payments are
exempt from attachment.[Title 36, §2718.1, Okla. Stats. Ann.]
Disability Benefits:
No
statutory provision.
Employee Benefits And Pensions:
An
employee benefit plan may provide against alienation or encumbrances of
interests therein and that such interests shall not be subject to garnishment,
attachment or other creditors` claims.[Title 60, §327, Okla. Stats. Ann.]
Annuities:
No
statutory provision.
Spendthrift Provisions: Trusts—
Oklahoma
recognizes spendthrift trusts to a limited extent.[Frensley v. Frensley, 177
Okla. 221, 58 P.2d 307; Keaton v. Stephenson, 206 Okla. 32 P.2d 1088] For a
realty trust, if the instrument gives no direction for accumulation, the surplus
of rents and profits beyond the sum necessary for the education and support of
the beneficiary is liable to claims of the beneficiary`s creditors.[Title 60,
§140, Okla. Stats. Ann.] Another statute states that any trust may validly
restrain the alienation of the interest of a beneficiary; nevertheless, the
income will be available to satisfy claims for support of a spouse or child or
for necessaries of the beneficiary. Furthermore, annual trust income in excess
of $25,000 is fully alienable and subject to garnishment.[Title 60, §175.25,
Okla. Stats. Ann.]
Insurance Proceeds—
Although
there is no statute or case dealing with insurance spendthrift trust clauses,
the statutes cited under "Life Insurance" above have been construed
to exempt proceeds payable to the insured`s wife from her creditors.[First
State Bank v. Conn., 136 Okla. 294, 277 P. 928]
Premiums:
Premiums
paid in fraud of creditors inure to those creditors, together with interest,
out of proceeds.[Title 36, §3631.1, Okla. Stats. Ann.]
Federal Election:
Not
allowed.[ORS §23.305]
Life Insurance: Death Proceeds—
The
proceeds of a policy of insurance effected by any person on his own life or on
another`s life, in favor of some person other than himself, go to the named
beneficiary free from the claims of creditors of the person effecting the same,
whether or not the right to change the beneficiary is reserved.[ORS §743.099]
Endowment And Surrender Proceeds—
The
cash surrender value of a life insurance policy payable to a beneficiary other
than the estate of the insured is exempt from the claims of creditors.[ORS
§743.099]
Group Insurance:
Proceeds
of group insurance are exempt from the claims of creditors unless such proceeds
are paid to the estate.[ORS §743.102]
Fraternal, Etc., Insurance:
By
statute, payments of a fraternal benefit society are exempt from creditors of
both the member and the beneficiary.[ORS §748.207]
Disability Benefits:
Proceeds
of all health insurance policies are exempt from the claims of creditors of
both the insured and beneficiary.[ORS §743.108]
Annuities:
Benefits
payable under annuity contracts are exempt from the claims of creditors up to
$250 a month.[ORS §743.105]
Spendthrift Provisions: Trusts—
Oregon
has no general statute, but spendthrift trusts are upheld.[Mattison v.
Mattison, 53 Or. 254, 100 P.4]
Insurance Proceeds:
Any
domestic life insurance company has the power to hold proceeds of life
insurance in trust upon terms agreed upon between company and policyholder,
provided that the forms of such trust agreements are first submitted to and
approved by the Commissioner of Insurance of Oregon.[ORS §732.240] Presumably,
spendthrift trust clauses in other policies would be recognized.
Premiums:
Premiums
paid on life insurance policies in fraud of creditors inure to their benefit
out of the proceeds.[ORS §743.099]
Federal Election:
Allowed.
Life Insurance: Death Proceeds—
The
proceeds of life insurance or annuity contracts payable to or for the benefit
of the insured`s spouse, children or any relative dependent upon the insured,
are exempt from claims of the insured`s creditors, whether or not the right to
change the beneficiary is retained.[Title 42, §8124(c)(6), Purdon`s Statutes]
A
similar section has been held to exempt the cash values in bankruptcy
proceedings, though the right to change the beneficiary has been reserved.[In
re Lang, 20 F.2d 239] Even single-premium retirement annuity contracts, with
certain death benefits to the wife in case of the insured`s death, are exempt
from claims of the insured`s creditors in bankruptcy proceedings.[Bowers v.
Reinhart, 78 F.2d 776]
Endowment And Surrender Proceeds—
See
"Life Insurance" above.
Group Insurance:
Proceeds
of group insurance, even if paid to the estate, are exempt from claims of
creditors of both the member and the beneficiary.[Title 42 §8124(c)(5),
Purdon`s Statutes] The exemption has been held to apply to proceeds paid upon
the insured`s becoming totally disabled.[Barnnovich v. Horwatt, 113 Pa. Super.
467, 173 A. 676]
Fraternal, Etc., Insurance:
Payments
of fraternal benefit societies are exempt from creditors of both the member and
the beneficiary.[Title 42, §8124(c)(1), Purdon`s Statutes]
Disability Benefits:
Accident
and disability payments are exempt from the claims of creditors of both the
insured and the beneficiary.[Title 42, §8124(c)(7), Purdon`s Statutes]
Annuities:
Any
contract of insurance or annuity issued to any solvent citizen of the state by
a company (domestic or foreign) admitted to do business in the state where the
insured or annuitant is payee shall be exempt from claims of his own creditors,
to the extent payments to him do not exceed $100 a month.[Title 42,
§8124(c)(3), Purdon`s Statutes]
Spendthrift Provisions: Trusts—
The
statutes recognize spendthrift trusts but make the income therefore liable for
support of anyone the beneficiary has a duty to support.
Insurance Proceeds—
Proceeds
of insurance or annuity contracts held by the insurer in trust may, by
agreement, be made exempt from creditors of the beneficiary.[Title 42,
§8124(c)(4), Purdon`s Statutes] This statute applies even where the beneficiary
(and not the insured) elects the optional settlement.[Provident Trust Co. v.
Rothman, 321 Pa. 177, 183 A. 793] See also §515, Title 40, noted under
"Annuities" above.
Premiums:
No
statutory provision.
Federal Election:
Allowed.
Life Insurance: Death Proceeds—
The
proceeds of a life insurance policy other than an annuity contract shall go to
the named beneficiary or assignee free from claims of insured`s or
policyowner`s creditors. Such proceeds also pass to the beneficiary free from
claims of his or her creditors (except for debts contracted after the proceeds
become payable).[26 L.P.R.A. §1133.]
Endowment And Surrender Proceeds—
No
statutory provison.
Group Insurance:
The
proceeds of group insurance are exempt from the claims of the insured`s or
beneficiary`s creditors.[26 L.P.R.A. §1134]
Fraternal, Etc., Insurance:
Exempt.[26
L.P.R.A. §3618]
Disability Benefits:
Disability
insurance payments up to $200 per month are exempt from liability for insured`s
debts and for debts of the beneficiary existing when the proceeds are made
available for his use.[26 L.P.R.A. §1132]
Annuities:
An
individual`s creditors cannot reach the first $250 a month payable to him under
annuity contracts. If an individual receives more than $250 a month from
annuity contracts, a court may order him to pay his creditors the "portion
of such excess benefits as to the court may appear just and proper, after due
regard for the reasonable requirements of the judgment debtor and his family,
if dependent upon him." The creditors cannot force surrender of the
contract.[26 L.P.R.A. §1135]
Spendthrift Provisions: Trusts—
No
statutory provision.
Insurance Proceeds—
No
statutory provision.
Premiums:
Where
a court finds that a debtor has paid premiums on an annuity in fraud of
creditors the creditors can recover the amount of such premiums, with
interest.[26 L.P.R.A. §1135]
Federal Elections:
Allowed.
Life Insurance: Death Proceeds—
The
proceeds of a policy of insurance effected by any person on his own life or
another`s life, in favor of a person other than himself, shall go to the named
beneficiary as against the creditors and representatives of the insured and of
the person effecting the insurance, whether or not the the right to change the
beneficiary is reserved, and whether or not the policy reverts to the
insured.[§27-4-11, Gen. Laws of R.I.]
Endowment And Surrender Proceeds—
See
"Insurance Proceeds" below.
Group Insurance:
No
specific statutory provision.
Fraternal, Etc., Insurance:
Payments
of a fraternal benefit society are exempt from claims of creditors of the
member, beneficiary, or any other person having a right thereunder.[§27-25-18,
Gen. Laws of R.I.]
Disability Benefits:
The
proceeds and benefits to be paid by virtue of any policy of accident and
sickness insurance are exempt from debts of the owner, insured, beneficiary or
any person having a right thereunder.[§27-18-24, Gen. Laws of R.I.]
Spendthrift Provisions: Trusts—
A
statute makes the interest of any person in an employees trust inalienable and
not subject to creditor`s claims.[§28-17-4, Gen. Laws of R.I.]
Aside
from statutes, spendthrift trusts are held ineffective.[Petition of Smyth, 49
R.I. 27, 139 A. 657]
Insurance Proceeds—
Any
policy of life or endowment insurance or any annuity contract may provide that
the proceeds or payments thereunder shall not be subject to transfer,
anticipation, commutation or encumbrance by any beneficiary, nor subject to
claims of the beneficiary`s creditors.[§27-4-12, Gen. Laws of R.I.]
Premiums:
Premiums
paid in fraud of creditors, with interest, inure to the benefit of those
creditors.[§27-4-11, Gen. Laws of R.I.]
Federal Election:
Not
allowed.[§15-41-35, S.C. Code]
Life Insurance: Death Proceeds—
Insurance
proceeds payable for the benefit of a beneficiary other than the insured`s
estate pass free of his creditors and the creditors of his
estate.[§38-63-40(A), S.C. Code]
Endowment And Surrender Proceeds—
No
statutory provision.
Group Insurance:
Proceeds
from group insurance are exempt from claims of creditors.[§38-63-40(C), S.C.
Code]
Fraternal, Etc., Insurance:
Payments
of fraternal benefit societies are exempt from creditors of both the
beneficiary and the insured.[§38-37-870, S.C. Code]
Disability Benefits:
Exempt.[§15-41-30(10)(C),
S.C. Code]
Annuities:
Proceeds
of annuity contracts, by agreement, may be held by the insurer exempt from the
claims of creditors.[§38-63-40(B), S.C. Code]
Spendthrift Provisions: Trusts—
No
general statute, but such trusts are held valid by state courts when limited to
income from an equitable life estate.[Spann v. Carson, 123 S.C. 371, 116 S.E.
427; Lynch v. Lynch, 161 S.C. 170, 159, S.E. 26; Albergotti v. Summers, 203
S.C. 137, 26 S.E.2d 395]
Insurance Proceeds—
Spendthrift
trust clauses in life insurance settlement agreements are valid. The
beneficiary of such proceeds can neither assign nor encumber them, and they are
not subject to legal process (except in an action to recover for
necessaries).[§38-65-100 S.C. Code]
Premiums:
Premiums
and interest thereon to defraud creditors inure to their benefit.[§38-63-40]
Federal Election:
Not
allowed.[§43-31-30, S.D. Code]
Life Insurance: Death Proceeds—
Proceeds
payable to the insured`s estate not in excess of $10,000 inure to the benefit
of the surviving spouse or minor children and such proceeds are exempt from the
creditors of any of them.[§43-45-6, S.D. Code; Whiteside v. Fischer, 61 S.D.
565, 250 N.W. 60] This exemption is applicable even though the insured had
other policies payable directly to his spouse which were exempt under other
sections of the law.[ Estate of Jacobs, 68 S.D. 513, 4 N.W.2d 809]
Proceeds
of life or health policies, not in excess of $20,000 payable to the insured,
his spouse or children are exempt from the creditors of any of them. Also
included are the proceeds of any life or health insurance policy or other sum
of money not in excess of $20,000, made payable by any mutual aid or benevolent
society to any member or beneficiary spouse or children.[§58-12-4, S.D. Code]
Endowment And Surrender Proceeds—
See
"Life Insurance" above. Under a prior section, similar to §58-12-4,
it was held that the cash values of life insurance were "proceeds"
within the meaning of the statute and were exempt from creditors` claims in
bankruptcy.[Magnuson v. Wagner, 1 F.2d 99; Schuler v. Johnson, 61 S.D. 141, 246
N.W. 632]
Group Insurance:
No
specific statutory provision.
Fraternal, Etc., Insurance:
Exempt.[§58-37-68,
S.D. Code]
Disability Benefits:
See
"Life Insurance" above.
Annuities:
Benefits
not in excess of $250 a month from all annuity contracts are exempt from the
claims of creditors of the annuitant. Amounts paid for or as premium on the
annuity with intent to defraud creditors, plus interest, inure to the
creditors.[§ §58-12-6, 58-12-7, 58-12-8, and 58-12-9, S.D. Code]
Spendthrift Provisions: Trusts—
The
income from a trust of lands is exempt from creditors` claims only to the
extent necessary for education and support. Further, the beneficiary may be
restrained from disposing of his interest, where the trust was created for the
payment of the income or an annuity out of the rents and profits of the
trust.[§ §43-10-13 and 43-10-12, S.D. Code]
Insurance Proceeds:—
If
an annuity contract so provides benefits, rights, etc., accruing under such
contract to a beneficiary shall not be transferable nor subject to commutation
and are exempt from execution by creditors under the same terms as those listed
under "Annuities" above.[§58-12-10, S.D. Code]
Premiums:
See
"Annuities" above.
Federal Election:
Not
allowed.[§26-2-112 Tenn. Code Ann.]
Life Insurance: Death Proceeds—
Life
insurance on the life of one spouse inures to the benefit of the surviving
spouse or children free from the claims of creditors. Under one section this is
true also of both insurance and annuity contracts for the benefit of a wife,
child, or dependent relative, whether or not the right to change the
beneficiary is reserved.[§ §56-7-201, 56-7-202, 56-7-203, Tenn. Code Ann.]
Endowment And Surrender Proceeds—
The
cash surrender value is exempt even where the policy is payable to the wife
with the right to change the beneficiary reserved.[In re Stansell, 8 F.2d 363]
And the exemption of "life insurance" includes the death benefits
under an accident insurance policy.[American Trust and Banking Co. v. Lessly,
171 Tenn. 561, 106 S.W.2d 551]
Group Insurance:
No
specific statutory provision.
Fraternal, Etc., Insurance:
Payments
of a fraternal benefit society are exempt from claims of the creditors of the
member, the beneficiary or any other person having a right
thereunder.[§56-25-208, Tenn. Code Ann.]
Disability Benefits:
Any
sum or sums of money payable under the terms of any contracts of accident,
health or disability insurance insuring the assured against loss by accidental
personal injuries, or insuring assured against loss by reason of physical
disability resulting from disease, are exempt from claims of all
creditors.[§26-2-110, Tenn. Code Ann.] Any sum or sums payable at the time of
the death of a person so insured are likewise exempt.
Annuities:
See
"Life Insurance" above.
Spendthrift Provisions: Trusts—
A
trust may be created which is exempt from creditors` claims when the trust is
created by, or the property so held has proceeded from, some person other than
the debtor and the trust has been declared by will or deed duly registered; but
claims of the State of Tennessee as a creditor are not barred.[§26-4-101, Tenn.
Code Ann.]
Insurance Proceeds—
There
is no statute specifically dealing with life insurance proceeds and no cases have
been found. Presumably, a spendthrift trust clause would be upheld.
Premiums:
No
statutory provision.
Federal Election:
Allowed.
Life Insurance: Death Proceeds—
No
money or benefits of any kind to be paid or rendered on a weekly, monthly or
other periodic or installment basis to the insured or any beneficiary under any
policy of insurance issued by a life, health or accident insurance company,
including mutual and fraternal insurance, or under any plan or program of
annuities and benefits in use by any employer, is liable to execution, etc., to
pay any debt of the insured or of any beneficiary except for premiums payable
on such policy or a debt of the insured secured by a pledge thereof.[Art.
21-22, Ins. Code, Vernon`s Texas Stats. Ann.]
Endowment And Surrender Proceeds—
The
cash surrender value of any policy which has been in force more than two years
is exempt from liability for any debt, provided that a member of the insured`s
family is the beneficiary thereunder, and except debts secured by a proper
assignment of the policy. If members of the insured`s family are only partial
beneficiaries, the exemption applies only to the extent of their interest. The
exemption is available only to the extent that all exemptions claimed for
personal property do not exceed $30,000 for a family or $15,000 for a single
adult.[Texas Property Code § §42.001, 42.002]
Group Insurance:
See
"Life Insurance" above.
Fraternal, Etc., Insurance:
See
"Life Insurance" above; and also Art. 10:28, which specifically
exempts payments of a fraternal benefit society from creditors of the member
and the beneficiary.
Disability Benefits:
See
"Life Insurance" above.
Annuities:
See
"Life Insurance" above and "Spendthrift Insurance Proceeds"
below.
Spendthrift Provisions: Trusts—
A
settlor may provide in the terms of a trust that the interest of a beneficiary
in the income or in the principal or in both may not be voluntarily or
involuntarily transferred before payment or delivery of the interest to the
beneficiary by the trustee. A declaration in a trust instrument that the
interest of a beneficiary shall be held subject to a "spendthrift
trust" is sufficient to restrain voluntary or involuntary alienation of
the interest by a beneficiary to the maximum extent permitted by this subtitle
[Texas Property Code, Title 9, §112.035].
Insurance Proceeds—
A
policy of insurance, or plan or program of annuities in use by an employer, may
contain a provision against assignment or commutation by any beneficiary
thereunder. Any assignment or commutation in violation of such a provision is
wholly void.[Art. 21.22, §2, Ins. Code] But see "Life Insurance"
above, last sentence.
The
provisions of the above section do not extend to protect the proceeds payable
to a named beneficiary in a lump sum from claims of the beneficiary`s
creditors.[Union Savings B. and L. v. Smith, 62, S.W.2d 175] Nor will they
exempt disability payments payable to the insured in a lump sum.[Preston v.
Martin, 69 S.W.2d 472] However, these rulings appear to have been superseded by
statute as cited In Re Young 166 BR 854 ((Bkrtcy.E.D.Tex. 1994)
Premiums:
Exemptions
do not apply to premiums paid in fraud of creditors or to a debt of insured
secured by the policy[Texas Property Code §21-22]
Federal Election:
Not
allowed [§78-23-15 Utah Code Ann.].
LIFE
INSURANCE: DEATH PROCEEDS—
Proceeds
payable to a spouse or dependent of the insured are exempt to the extent
reasonably necessary for support [§78-23-6, Utah Code].
ENDOWMENT
AND SURRENDER PROCEEDS—
Accrued
divedends and loan values not exceeding $1,500 for all contracts are exempt
§78-23-7, Utah Code].
GROUP
INSURANCE:
No
specific statutory provision.
FRATERNAL,
ETC., INSURANCE:
Payments
of fraternal benefit societies are exempt from the claims of creditors of the
member and the beneficiary [§31-29-25, Utah Code Ann.].
DISABILITY
BENEFITS:
Exempt
[§78-23-5 Utah Code].
ANNUITIES:
No
statutory provision.
SPENDTHRIFT
PROVISIONS: TRUSTS—
No
statutory provision. No cases have been found dealing with the subject.
INSURANCE
PROCEEDS—
No
statutory provision.
PREMIUMS:
No
statutory provision.
Federal Election:
Allowed.
LIFE
INSURANCE: DEATH PROCEEDS—
The
proceeds of life insurance effected by any person on his own life or on
another`s life, in a favor of a person other than himself, shall go to the
named beneficiary as against the creditors and representatives of the insured
or the person effecting the insurance, whether or not the right to change the
beneficiary has been reserved, and whether or not the policy is payable to the
insured if the beneficiary dies first [Title 8:3706, Vt. Stats. Ann.].
ENDOWMENT
AND SURRENDER PROCEEDS—
The
cash value is not exempt if right to change beneficiary is reserved [Cohen v.
Samuels, 245 U.S.50].
GROUP
INSURANCE:
Proceeds
from group insurance are exempt from claims of creditors, unless such insurance
was issued in their favor [Title 8:3708, Vt. Stats. Ann.].
FRATERNAL,
ETC., INSURANCE:
Proceeds
of such insurance are exempt from the debts of members or beneficiaries [Title
8:4478, Vt. Stats. Ann.].
DISABILITY
BENEFITS:
These
benefits are exempt from the debts of the insured or beneficiary [Title 8:3707,
Vt. Stats. Ann.].
ANNUITIES:
Benefits
not in excess of $350 per month from all annuity contracts are exempt from the
claims of creditors of the annuitant [Title 8:3709, Vt. Stats. Ann.].
SPENDTHRIFT
PROVISIONS: TRUSTS—
No
statutory provisions.
INSURANCE
PROCEEDS—
Spendthrift
trust provisions are allowed in annuity or life insurance policies. Proceeds
held by insurance companies under such provisions are exempt from the
beneficiary`s creditors [Title 8:3704, 3705, Vt. Stats. Ann.].
PREMIUMS:
Premiums
paid for life insurance or annuity policies with intent to defraud creditors
inure to their benefit out of the proceeds [Title 8:3706, Title 8:3709, Vt.
Stats. Ann.].
Federal Election:
Not
allowed [§34-3.1 Code of Va.].
LIFE
INSURANCE: DEATH PROCEEDS—
Where
a policy of insurance is effected by any person on his own life or on the life
of another, in favor of a person other than himself, or, except in cases of
transfer to defraud creditors, if a life policy is assigned or in any way made
payable to such person, the beneficiary or assignee, other than the insured or
the person so effecting the insurance, is entitled to the proceeds and avails
thereof as against the creditors and representatives of the insured or the
person effecting the insurance. This is true whether or not the right to change
the beneficiary has been reserved, and whether or not the policy is made
payable to the insured if the beneficiary dies first [§38.1-448, Code of Va.].
ENDOWMENT
AND SURRENDER PROCEEDS:
If
the right to change the beneficiary is reserved, and the cash surrender or loan
value is claimed by creditors, the insurance is not entitled to the statutory
exemption, except in the case of householders or heads of families or their
beneficiaries or assignees, and the exemption for such proceeds cannot exceed
$10,000. When the amount of such insurance entitled to an exemption represents
proceeds from two or more policies and the total amount exceeds the allowable
limit, the protection is allowed for each policy pro rata in accordance with
the respective annual premiums involved [§38.1-449, Code of Va.].
Creditors
of an insured, after his death, have no rights in the proceeds of a policy on
his life for the benefit of another except as to premiums paid while insolvent
[White v. Mutual Life, 150 Va. 849, 143 S.E. 340].
GROUP
INSURANCE:
Group
insurance policies and proceeds are exempt from creditors of the insured and of
the beneficiary [§38.1-482, Code of Va.].
FRATERNAL,
ETC., INSURANCE:
Payments
of fraternal benefit associations and benefits of co-operative non-profit life
benefit companies are exempt from creditors of the member and the beneficiary
[§38.1-638.33, Code of Va.].
DISABILITY
BENEFITS:
Disability
payments under a life insurance policy have been held to come within the exemption
set forth in §38.1-346 for accident and sickness benefits [Atlantic Life Ins.
Co. v. Ring, 167 Va. 121, 187 S.E. 449].
ANNUITIES:
No
statutory provision.
SPENDTHRIFT
PROVISIONS: TRUSTS—
A
general statute provides that property may be held in trust to the extent of
$500,000 in value for support and maintenance of beneficiaries free from
existing claims of the beneficiaries` creditors, but such trusts shall not
operate to prejudice of claims of any creditors of creator of the trust
[§55-19, Code of Va.].
INSURANCE
PROCEEDS—
The
proceeds of a life insurance policy may be held in trust by the insurer at
maturity, and the contract between the insurer and insured may exempt payments
from creditors of the beneficiary, but this does not apply to that portion of
the proceeds that is represented by premiums paid by the beneficiary. In any
case, the exemption allowed by this section shall not exceed that allowed by
§55-19 [§§38.1-444, 38.1-447, Code of Va.].
PREMIUMS:
Premiums
paid in fraud of creditors inure to their benefit out of the proceeds
[§38.1-448, Code of Va.].
FEDERAL
ELECTION:
Allowed.
LIFE
INSURANCE: DEATH PROCEEDS—
The
proceeds of life insurance effected by any person on his own life, or on
another`s life, in favor of a person other than himself, are exempt from claims
of creditors of the insured and of the person effecting the insurance, and such
proceeds are also exempt from all liability for any debt of the beneficiary
existing at the time the proceeds are made available for his use. And this is
true whether or not the right to change the beneficiary is reserved, and
whether or not the policy is made payable to the insured or his estate in the
event the beneficiary predeceases the insured [§48.18.410, Rev. Code of Wash.].
Every
life insurance policy made payable to, or for the benefit of, the spouse of the
insured, or to a trustee for the benefit of the spouse, shall, unless contrary
to the terms of thee policy, inure to the separate use and benefit of such
spouse [§48.18.440, Rev. Code of Wash.].
ENDOWMENT
AND SURRENDER PROCEEDS—
"Proceeds"
includes cash surrender value. The right of insured to request and receive cash
surrender value of insurance policy is not asset or property right available to
the insured`s creditors in bankruptcy proceeding; for until insured exercises
this purely personal right, there is no debt due him from the insurer [In re
Elliott, 74 Wash. 2d 600, 446 P.2d 347].
GROUP
INSURANCE:
Group
insurance proceeds (with certain exceptions as to debtor groups contained in
§48.24.040) are exempt, whether payable to the insured or to a beneficiary,
from all debts of any person having a right under the policy [§48.18.420, Rev.
Code of Wash.].
FRATERNAL,
ETC., INSURANCE:
Payments
of fraternal benefit societies are exempt from claims of creditors of the
member and of the beneficiary [§48.36.210, Rev. Code of Wash.].
DISABILITY
BENEFITS:
The
proceeds of disability insurance contracts, or of such contracts which are made
supplemental to life insurance policies or annuity contracts, are exempt from
any liability for a debt of the insured, and any debt of the beneficiary
existing at the time the proceeds are made available for his use [§48.18.400,
Rev. Code of Wash.].
ANNUITIES:
Annuity
contract benefits, due to the annuitant who paid the consideration for the
annuity contract, are exempt from execution, except: (1) Premiums paid in fraud
of creditors inure to the benefit of those creditors: (2) The total exemption
of annuity payments shall not exceed $250 per month, with the excess being
subject to garnishment to same extent as wages and salaries; (3) If the
benefits total more than $250 per month, the court may order payment to the
judgment creditor of such portion of the excess as the court may think proper.
The benefits accruing under such contract to a beneficiary shall not be
transferable nor subject to commutation, and if the benefits are payable
periodically or at stated times, the same exemptions and exceptions contained
herein for the annuitant, shall apply with respect to such beneficiary
[§48.18.430, Rev. Code of Wash.].
SPENDTHRIFT
PROVISIONS: TRUSTS—
A
general statute exempts property held in trust from claims of trust
beneficiary, other than for necessaries or for support of children under 18,
unless beneficiary is creator of the trust [§§6.32.250 and 11.96.150, Rev. Code
of Wash.].
INSURANCE
PROCEEDS—
There
is no statute specifically dealing with a spendthrift trust clause in a life
insurance policy, and no cases have been found, but presumably such a clause
would be upheld.
PREMIUMS:
Life
insurance premiums paid in fraud of creditors inure with interest to those
creditors out of the proceeds [§48.18.410, Rev. Code of Wash.]. See also
"Annuities" above.
FEDERAL
ELECTION:
Not
allowed [§38-10-4 W. Va. Code].
LIFE
INSURANCE: DEATH PROCEEDS—
The
proceeds of a policy of insurance effected by any person on his own life or on
another`s life, in favor of a person other than himself, go to the named
beneficiary as against the creditors and representatives of the insured and of
the person effecting the insurance, whether or not the right to change the
beneficiary is reserved, and whether or not the policy reverts to the insured
if the beneficiary dies first [§33-6-27, W. Va. Code].
Any
policy, taken out by a married woman on her husband, or by some third person,
expressed to be for her benefit or in trust for her, inures to her benefit free
from the claims of the representative or creditors of the husband and those of
the person effecting the insurance; except that if the annual premium thereon
exceeds $300, and is paid by any person with an intent to defraud his
creditors, the amount of such premiums paid in excess of that sum, with
interest, inures to those creditors out of the proceeds. Nothing in the law,
however, prevents a married woman from validly assigning her interest in such a
policy, absolutely or as collateral [§48-3-23, W. Va. Code].
ENDOWMENT
AND SURRENDER PROCEEDS—
Unmatured
contracts are exempt. Up to $4,000 in accrued dividends, interest, and loan
values are exempt [§38-10-4, W. Va. Code].
GROUP
INSURANCE:
Proceeds
are exempt from the claims of the creditors of the insured or the beneficiary
[§33-6-28, W. Va. Code].
FRATERNAL,
ETC., INSURANCE:
Payments
of a fraternal benefit society are exempt from claims of creditors of both the
member and the beneficiary [§33-23-21, W. Va. Code].
DISABILITY
BENEFITS:
Exempt
[§38-10-4, W. Va. Code].
ANNUITIES:
No
statutory provision.
SPENDTHRIFT
PROVISIONS: TRUSTS—
A
general statute provides that a trust for support and maintenance of the
beneficiary is exempt from claims of the beneficiary`s creditors, if the trust
instrument so provides [§36-1-18, W. Va. Code].
INSURANCE
PROCEEDS—
Although
there is no statute dealing with a spendthrift trust clause in a life insurance
policy, and no cases have been found, presumably such a clause would be upheld.
PREMIUMS:
Premiums
paid with intent to defraud creditors, together with interest, inure to the
creditors out of the proceeds [§33-6-27, W. Va. Code]. Also see "Life
Insurance" above.
FEDERAL
ELECTION:
Allowed.
LIFE
INSURANCE: DEATH PROCEEDS—
The
proceeds of a policy of insurance effected by any person on his own life or on
another`s life, in favor of a person other than himself, go to the named
beneficiary as against the creditors and representatives of the insured and of
the person effecting the insurance, whether or not the insurance reverts to the
insured if the beneficiary dies first, and whether or not the right to change
the beneficiary has been reserved [§815.18(19), West`s Wis. Stats. Ann.].
Further,
any married woman may, in her own name or in the name of a trustee, cause to be
insured for her sole use the life of her husband, son or other person for any
definite period of time or for the natural life of such person; and any person
effecting insurance on his own life or on another`s life may cause the same to
be made payable or assign the policy to a married woman, or in trust for her; and
every such policy is the sole and separate property of such married woman and
inures to her separate use and benefit and that of her children, free from
claims of creditors of her husband and of the person effecting the insurance,
and also free from her creditors to the amount of $5,000. The exemption applies
whether or not the right to change the beneficiary is reserved. Where the
married woman dies prior to maturity of the policy, the proceeds may be payable
to her children or to any other named beneficiary [§66.09, West`s Wis. Stats.
Ann.].
Under
the above sections it has been held that the cash surrender value does not pass
to the trustee in bankruptcy for the benefit of insured`s creditors, where the
policy is payable to the wife [Cannon v. Lincoln Natl. Life, 208 Wis. 452, 243
N.W. 320; In re Churchill, U.S.C.C.A., 209 F. 766. But see contra, In re Grant,
U.S.D.C., 21 F.2d 88]. A married woman in order to profit by her exemption as
beneficiary, must have been married when the policy was issued [Luebbe v.
Vonnekold (1947), 250 Wis. 469, 27 N.W.2d 458].
ENDOWMENT
AND SURRENDER PROCEEDS—
See
"Life Insurance" above.
GROUP
INSURANCE:
No
specific statutory provision.
FRATERNAL,
ETC., INSURANCE:
Exempt
up to $5,000 if insured paid any part of premiums; absolutely exempt if person
other than insured paid all premiums [§815.18(19) West`s Wis. Stats. Ann.].
DISABILITY
BENEFITS:
All
sums due or to become due and payable or paid to any person by any life
insurance company or association or health and accident insurance company or
association, for partial, total, temporary or permanent disability under any
contract or policy of insurance are exempt from creditors` claims, but not
exceeding $150 per month [§815.18(25), West`s Wis. Stats. Ann.].
ANNUITIES:
No
statutory provision.
SPENDTHRIFT
PROVISIONS:
A
trust may be set up so as not to be subject to alienation by the beneficiary.
But after payments or principal have become due to the beneficiary, the
judgment creditor may apply to court for order directing trustee to satisfy
judgments out of such payments [§701.06, West`s Wis. Stats. Ann.].
INSURANCE
PROCEEDS—
Proceeds
of insurance or an annuity contract may be held in trust by the insurer subject
to such exemptions from creditors of the beneficiary as are agreed to between
the insurer and the policyholder [§632.42, West`s Wis. Stats. Ann.]. Also see
exemption of creditors of a married woman as beneficiary, in §766.09, above.
PREMIUMS:
Premiums
paid in fraud of creditors with interest thereon, inure to their benefit out of
the proceeds [§815.18(19), West`s Wis. Stats. Ann.].
FEDERAL
ELECTION:
Not
allowed [§1-20-109 Wyo. Stats.].
LIFE
INSURANCE: DEATH PROCEEDS—
The
proceeds of a policy of insurance effected by a person on his own life or on
another`s life, in favor of some person other than himself, go to the lawful
beneficiary free from claims of creditors of the person effecting the
insurance. A reservation of the right to change the beneficiary makes no values
payable under the policy, either before or after the insured`s death, available
to the creditors [§26-15-129, Wyo. Stats.].
ENDOWMENT
AND SURRENDER PROCEEDS—
No
statutory provision.
GROUP
INSURANCE:
Group
insurance payable to the insured or a beneficiary is not liable to be applied
for any debt of the insured or beneficiary and is not part of the estate of the
insured for the payment of debts [§26-15-131, Wyo. Stats.].
FRATERNAL,
ETC., INSURANCE:
Fraternal
benefit society payments are exempt from claims of creditors of both the member
and the beneficiary [§§26-29-116, 26-34-118,
DISABILITY
BENEFITS:
Proceeds
of all contracts of disability insurance are exempt from all liability for any
debt of the insured or beneficiary [§26-15-130,
ANNUITIES:
Annuity
contracts are not subject to the claims of creditors, except for amounts paid
in fraud of creditors with interest, which inure to their benefit out of the
proceeds. Proceeds are exempt up to $350 per month. A court may order an
annuitant to pay a creditor any excess of $350 per month it considers just and
proper. By contract, annuity benefits, rights and privileges can be made
non-assignable or non-transferable by the beneficiary [§26-15-132,
SPENDTHRIFT
PROVISIONS:
There
is no general statute, and no cases have been found dealing with spendthrift
trusts.
INSURANCE
PROCEEDS—
A
life insurance company may hold the proceeds of insurance, endowment or annuity
contracts with such exemptions from the claims of creditors of beneficiaries
other than insured as have been agreed to by the company and the insured.
Proceeds may also be held free from assignment, transfer, anticipation or
commutation, or encumbrances by creditors of any beneficiary other than
insured, and free of any legal process against such a beneficiary [§26-15-133,
Wyo. Stats.]. See also "Annuities" above.
PREMIUMS:
Premiums
paid in fraud of creditors, with interest, inure to their benefit out of the
proceeds [§26.15-129,
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