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I have a car and a life insurance policy does this need to go through probate ? Who is responsible for my credit card debt?

Augusta, GA |

I have a checking account that I use to pay bills, a car with a loan and a life insurance policy with my children as benefactors

Attorney Answers 3

  1. The insurance has a beneficiary, so that will not go through probate. The rest should be divided up according you your Will after all debts are paid. If you don't have a will, I can help.

    The DiGiulio Law Firm

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  2. Who owns your life insurance determines whether the proceeds are included for estate tax purposes. Section 2042 of the Internal Revenue Code states that the value of life insurance proceeds insuring your life are included in your gross estate if the proceeds are payable to named beneficiaries, if you possessed any incidents of ownership in the policy at the time of your death. Since the congress in its infinite stupidity ensured that the estate tax is revived in 2013, you need to contact your life insurance company and transfer ownership of the policy to the beneficiaries. It is a simple matter of filling out and signing a form. (Most policies are written with the person who is insured as the owner.)

    The car can be transferred through the tag office without probate- most simply, by putting other people on the title. If money is still owed on it at the time of your death, as a practical matter, if your heirs keep the payments up, there should be no problems.

    The checking account can be designated "POD"- payable upon death- to designated beneficiaries, or can be made a joint account by putting their name on the account, if they are very trustworthy.

    No one would be responsible for your credit card debt, if you die intestate; but if you have a will, the creditor can come against your estate. When all you have is a car and a small checking account, often the cost and trouble of going through probate is not worth it. But if there are other assets, it is a good idea. Either way, you should have an attorney prepare an Advance Directive for Health Care ("Living Will") and a Durable Power of Attorney, so if you are incapacitated in your last days, your heirs can pay the bills and know what your wishes are.

    Note, however, that if either you or any of your children ever declares bankruptcy or are sued, having your car or checking account in joint ownership would cause problems.

  3. It is possible to set up an estate like yours where much of it bypass probate. Whether than is a good idea depends on the amount of insurance, the amount of debt, whetehr your children are minors or not, etc. You need to spend some time with a lawyer, probably do need a will, and may need at least some simple related documents and planning. If your estate is not large, this will cost very little and save your children a lot of grief.

    If you find this answer helpful, please mark it here on AVVO as helpful. In answering you, I am attempting to communicate general legal information and am not representing you (and am not your lawyer). Do feel free to call me at 404-768-3509 if you wish to discuss actual representation (the phone call also does not retain counsel; that requires an office visit and appropriate paperwork). In that a forum such as this provides me with limited details and doesn't allow me to review details and documents, it is possible that answers here, while meant to be helpful, may in some cases not be complete or accurate, and I highly recommend that you retain legal counsel rather than rely on the answers here. (You can also email my office at . An email also does not retain my office, but can help you get an appointment set if you prefer not to call). I am happy to discuss possible representation with you. Any information in this communication is for discussion purposes only, and is not offered as legal advice. There is no right to rely on the information contained in this communication and no attorney-client relationship is formed. Nothing in my answer should be considered as tax-advice. To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein. I am also required to advise you, if your question concerns bankruptcy, that the U.S. Congress has designated Ashman Law Office as a debt relief agency that can help people file bankruptcy.

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