What assets must be used to pay of the debts of an estate?
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What assets must be used to pay of the debts of an estate?
My mother recently passed away and I am her only living heir (daughter). She left only 2 assets that fall under probate, one is a old 10 year old car and the other is a small whole life policy that she had taken out on me (cash value around $10,000). Last year she lost her house to foreclosure. She also had a significant amount of debt, most of it now with bill collectors. Does the car and life insurance policy need to be liquidated to pay for some of these bills (this includes paying funeral expenses)? I am in the process of assigning ownership of the life insurance policy to myself; we still pay an annual fee on it. There is no cash in the estate.
Asked on May 8, 2015 under Estate Planning, Connecticut
Answers:
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
Life insurance rpoceeds pass outside of an estate. That means, since they are not subject to probate, they need not be used to pay off estate dabts. However, the deceased's property (both real and personal) are subject to creditors claims; therefore the car must be sold.
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