The bottom line Are death benefits protected from beneficiary creditors? Generally, life insurance proceeds paid to a named beneficiary are not included in the beneficiary’s gross income, but the federal tax rule does not answer the separate creditor question. Naming a trust can change who controls the funds and how they are distributed, but it … Read more

The bottom line Do federal benefits follow different beneficiary rules? Yes, and the specific federal life insurance program determines who you may name and how you update the designation. FEGLI and VA guidance differ, so check the plan’s own instructions before making a change. That check can keep the choice aligned with your wishes. The … Read more