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Committee clears bill to clarify creditor exemptions for life insurance and annuity payouts
Summary
The Commerce and Labor Committee unanimously approved Senate Bill 11 06 to clarify that life insurance and annuity payments designated for beneficiaries are exempt from creditors' claims, and to specifically list enforcement methods that are excluded.
The Commerce and Labor Committee voted unanimously to move Senate Bill 11 06 out of committee. The bill, carried by Senator Kyle, would clarify that Tennessee Code section 50-6-7203's exemption for amounts payable under life insurance and annuity contracts extends to all claims of creditors and explicitly lists methods of enforcement—"execution, attachment, garnishment, or seizure."
Sponsor Senator Kyle and two witnesses told the committee the statute dates to the early 20th century and that courts have recently read ambiguities into the language. Tamara Hill testified the bill "doesn't change anything. It just clarifies it and says, we said a hundred years ago this stuff was exempt." Darlene Tucker, a certified financial planner, said the change "eliminates the distinction that one court has now created" and would give financial planners greater certainty to advise clients.
Committee members asked whether the bill applies prospectively; Senator Kyle replied it applies prospectively and does not interfere with existing deeds of trust. The clerk recorded eight ayes and the bill was moved to the next committee listed on the calendar per the clerk's announcement.
— Ending note: The committee advanced SB 11 06 with unanimous support and recorded the sponsor's intent to clarify statutory language protecting beneficiary-designated insurance and annuity payments.
