A. If a policy of life insurance is effected by any person on the person's own life or on another life in favor of another person having an insurable interest in the policy, or made payable by assignment, change of beneficiary or other means to a third person, the lawful beneficiary or such third person, other than the person effecting the insurance or the person's legal representatives, is entitled to its proceeds against the creditors and representatives of the person effecting the insurance.
B. Subject to the statute of limitations, the amount of any premiums for insurance paid in fraud of creditors, with interest, shall inure to their benefit from the proceeds of the policy, but the insurer issuing the policy shall be discharged of all liability on the policy by payment of the proceeds in accordance with its terms, unless before payment the insurer received written notice by or in behalf of some creditor, with specification of the amount claimed, claiming to recover for certain premiums paid in fraud of creditors.
C. For the purposes of subsection A, a policy shall also be deemed to be payable to a person other than the insured if and to the extent that a facility-of-payment clause or similar clause in the policy permits the insurer to discharge its obligation after the death of the individual insured by paying the death benefits to a person as permitted by the clause.
D. If, for a continuous, unexpired period of two years, a policy of life insurance has named as beneficiary the insured's surviving spouse, child, parent, brother, sister or any other dependent family member, then, in event of bankruptcy or in any proceeding before any court in this state, the cash surrender value of the insurance, in the proportion that the policy names any such beneficiary, shall be exempt from claims and demands of all creditors, other than a creditor to whom the policy has been pledged or assigned, and except that, subject to the statute of limitations, the amount of any premiums which are recoverable or avoidable by a creditor pursuant to title 44, chapter 8, article 1, with interest, shall inure to their benefit from the cash surrender value. For the purposes of this subsection, "dependent" means a family member who is dependent on the insured for not less than half support.
Notes of Decisions
Cited in
11
cases, 1999–2020 · leading case:
In Re Est. of King, 269 P.3d 1189 (Ariz. Ct. App. 2012).
In Re Est. of King, 269 P.3d 1189 (Ariz. Ct. App. 2012).
· cites it 41× “Reed filed a timely notice of appeal. We have jurisdiction pursuant to A.R.S.”
ML Servicing Co. v. Coles, 334 P.3d 745 (Ariz. Ct. App. 2014).
· cites it 22× “1 We find Appellants are creditors of the decedent pursuant to AR.S. § 20-1131. Accordingly, we affirm. FACTS AND PROCEDURAL HISTORY ¶ 2 Mortgages, Ltd.”
May v. Ellis, 92 P.3d 859 (Ariz. 2004).
· cites it 9× “”) § 20-1131 (2002). I. ¶2 Nancy May survived her husband James Edward May, who died on April 21, 2002.”
Nowak v. Hummel (In Re Hummel), 440 B.R. 814 (9th Cir. BAP 2010).
· cites it 5× “The corresponding exemption for the cash surrender value of life insurance policies in Arizona’s Insurance Code at Ariz.Rev.Stat. § 20-1131(D) contains the identical phrase as that under Ariz.”
In Re the Est. of Fred N. Kirkes, 295 P.3d 432 (Ariz. 2013).
· cites it 2× “Much like retirement accounts, insurance proceeds are generally protected from estate creditors, see A.R.S. § 20-1131, and may receive ongoing creditor protections through estate planning.”
Agans v. Barnd, 998 P.2d 449 (Ariz. Ct. App. 1999).
“section 20-1131. Further, we reject appellant’s argument that this matter must be remanded for an evidentiary hearing to determine whether Christina can rebut the statutory presumption that she consented to decedent naming his mother as the insurance beneficiary.”
Garcia v. Warfield (In re Garcia), 567 B.R. 168 (D. Ariz. 2017).
· cites it 12× “§ 20-1132 does for group life insurance what its companion statute, A.R.S. § 20-1131, does for individual life insurance — it prevents creditors of the 'purchaser and the insured from making claims to the proceeds.”
Midfirst v. Barness (Ariz. Ct. App. 2014).
· cites it 9× “) § 44-1004(A) (1) (2013),2 and that, in so doing, creditors now have a right to funds from Ron Barness’ term life insurance policy from Northwestern.”
Marsh v. Mayer (Ariz. Ct. App. 2015).
· cites it 4× “3The Coles Defendants also argued A.R.S. § 20-1131(A) (2010), a statute that protects “lawful beneficiar[ies]” of life insurance proceeds from claims asserted by a decedent’s creditors, barred a constructive trust.”
Marsh v. Coles, 361 P.3d 383 (Ariz. Ct. App. 2015).
· cites it 4× “The Coles Defendants also argued A.R.S. § 20-1131(A) (2010), a statute that protects "lawful beneficiarles]" of life insurance proceeds from claims asserted by a decedent’s creditors, barred a constructive trust.”
Parmeley v. Carr (Ariz. Ct. App. 2020).
· cites it 2× “See A.R.S. §§ 20-1131(A), 14-6101(A). We are not persuaded.”
— Ariz. Rev. Stat. § 20-1131(A) — 7 cases
In Re Est. of King, 269 P.3d 1189 (Ariz. Ct. App. 2012).
“Reed filed a timely notice of appeal. We have jurisdiction pursuant to A.R.S.”
May v. Ellis, 92 P.3d 859 (Ariz. 2004).
“”) § 20-1131 (2002). I. ¶2 Nancy May survived her husband James Edward May, who died on April 21, 2002.”
Marsh v. Mayer (Ariz. Ct. App. 2015).
“3The Coles Defendants also argued A.R.S. § 20-1131(A) (2010), a statute that protects “lawful beneficiar[ies]” of life insurance proceeds from claims asserted by a decedent’s creditors, barred a constructive trust.”
Marsh v. Coles, 361 P.3d 383 (Ariz. Ct. App. 2015).
“The Coles Defendants also argued A.R.S. § 20-1131(A) (2010), a statute that protects "lawful beneficiarles]" of life insurance proceeds from claims asserted by a decedent’s creditors, barred a constructive trust.”
Parmeley v. Carr (Ariz. Ct. App. 2020).
“See A.R.S. §§ 20-1131(A), 14-6101(A). We are not persuaded.”
— Ariz. Rev. Stat. § 20-1131(D) — 1 case
Nowak v. Hummel (In Re Hummel), 440 B.R. 814 (9th Cir. BAP 2010).
“The corresponding exemption for the cash surrender value of life insurance policies in Arizona’s Insurance Code at Ariz.Rev.Stat. § 20-1131(D) contains the identical phrase as that under Ariz.”
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