Tillem & McNichol

Len Tillem and Rosie McNichol

Dear Len & Rosie,

My mother is 75 years old and receives SSI. She has somehow managed to incur $15,000 of credit card debt.

Every time she received something in the mail offering her a good deal she’d sign the pre-approved application and a few weeks later she’d have another credit card.

I finally put a stop to this when I got involved in her finances. My mother owns nothing except for two insurance policies worth $10,000.

Should she declare bankruptcy? Can bill collectors demand payment from mom’s insurance money after her death?

Andrea

Dear Andrea,

Your mother can declare bankruptcy if she wants to, but it isn’t really necessary. She owns next to nothing.

Since she is on Supplemental Security Income (SSI) from Social Security, the total value of her countable assets has to be less than $2,000.

Her life insurance policies are certainly term life policies with no cash surrender value, otherwise she wouldn’t be eligible.

Since SSI payments are exempt from attachment, your mother is judgment-proof, if only because the consumer lending industry hasn’t yet figured out how to squeeze blood from a turnip.

If your mother’s insurance policies do not name her children as beneficiaries, then she should change that now.

She gets Medi-Cal benefits automatically because she collects SSI. Upon her death, the California Department of Health Care Services will assert a claim against anything she owns in her estate that isn’t spent on her funeral and burial expenses.

If the insurance pays into her estate, it will be subject to the Medi-Cal reimbursement claim, and anything left after that will wind up going to your mother’s creditors. You would wind up with nothing for yourself.

If you are the beneficiary of your mother’s life insurance policies, then the money will pass directly to you upon her death.

Since the insurance money will not be part of her probate estate, it will not be subject to the claims of her creditors. You will not have to reimburse Medi-Cal either.

You are not legally obligated to pay your mother’s debts, but this will not prevent her creditors from asking you to pay them off after your mother’s death.

If they do, mail them a photocopy of your mother’s death certificate with a note telling them that your mother died with no assets and that she was on SSI and Medi-Cal. That should take care of it.

If they continue to ask you for money, give them nothing.

Len and Rosie

Len Tillem and Rosie McNichol are elder law attorneys. Contact them at 846 Broadway, Sonoma, CA 95476, by phone at 707-996-4505, or at LenTillem.com. Len has a new video channel on YouTube.

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