By Alethia Kasben
Gongwer News Service
In a unanimous opinion, the Michigan Supreme Court on Monday ruled a 401(k) retirement account and life insurance proceeds are exempt from creditors.
The case, In re Estate of Jennifer L. Fowler (SC Docket No. 167501-3) stems from a wrongful-death action filed against Jennifer Fowler’s estate after Jennifer Fowler killed her mother, Helen Fowler, and herself.
Jennifer’s estate was found liable, and the circuit court awarded judgment in favor of Helen’s estate. However, Jennifer’s estate was mostly made up of her retirement account and her life insurance.
The Court of Appeals determined that proceeds from both accounts may be used to satisfy the judgment in favor of Helen’s estate. The Supreme Court, in an opinion written by Justice Kimberly Thomas, unanimously reversed.
“We hold that the 401(k) and life insurance proceeds are beyond the reach of creditors through MCL 700.7605(1) due to these exemptions,” the opinion says. “The 401(k) proceeds are exempt as a ‘payment from’ a qualifying retirement plan under MCL 700.7605(2). And the life insurance proceeds are exempt under MCL 700.7605(4) because the proceeds would not have been subject to creditor claims if paid ‘other than to the settlor’s estate.’”
Gongwer News Service
In a unanimous opinion, the Michigan Supreme Court on Monday ruled a 401(k) retirement account and life insurance proceeds are exempt from creditors.
The case, In re Estate of Jennifer L. Fowler (SC Docket No. 167501-3) stems from a wrongful-death action filed against Jennifer Fowler’s estate after Jennifer Fowler killed her mother, Helen Fowler, and herself.
Jennifer’s estate was found liable, and the circuit court awarded judgment in favor of Helen’s estate. However, Jennifer’s estate was mostly made up of her retirement account and her life insurance.
The Court of Appeals determined that proceeds from both accounts may be used to satisfy the judgment in favor of Helen’s estate. The Supreme Court, in an opinion written by Justice Kimberly Thomas, unanimously reversed.
“We hold that the 401(k) and life insurance proceeds are beyond the reach of creditors through MCL 700.7605(1) due to these exemptions,” the opinion says. “The 401(k) proceeds are exempt as a ‘payment from’ a qualifying retirement plan under MCL 700.7605(2). And the life insurance proceeds are exempt under MCL 700.7605(4) because the proceeds would not have been subject to creditor claims if paid ‘other than to the settlor’s estate.’”
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