Legal Question in Wills and Trusts in Indiana
Should I leave my estate to my child?
If my wife and I both die, we have named our daughter as beneficiary for our substantial life insurance policies. We owe more on our home that it is worth, and our cars have large loans on them. If we leave all of our ''estate'' to our daughter, will she have to pay for the house out of her insurance monies, or be responsible for our cars to pay them off? Wouldnt it be better to NOT leave everything to her, so she wont be tied to owing the money? If I leave her special bequests of personal property but leave her unamed in the estate, would this work? Can I leave her everything and she not be responsible for the house and cars, just letting them go back to the lenders? Would this work? Would she be better off just having the moneys and not the estate and the large debts owed with it? Do I HAVE to name a residual beneficiary that will be stuck with all my bills? How does that work?
2 Answers from Attorneys
Re: Should I leave my estate to my child?
You ask questions for which the answers are too complicated to give in this forum. I strongly suggest that you get yourself to an attorney and speak with them about the details.
Re: Should I leave my estate to my child?
As a general rule, life insurance benefits paid to a named beneficiary are not subject to probate (that is, they go directly to the beneficiary without need for a court order) and they are not subject to the claims of any creditors. If, on the other hand, your life insurance policy did not name any beneficiaries, then the death benefit proceeds would be paid to your probate estate, and would thus be subject to the claims of your creditors. Based on the skimpy information discernable from your question, it would be best for your dauglhter if you went ahead and named her as beneficiary of both your insurance (through the insurance company procedures) and your probate estate. Beneficiaries are not responsible for the debts of decedents. If the beneficiary is named to receive a parcel of real estate that is encumbered by a mortgage, then she takes title to that real estate subject to the mortgage lien but not the debt itself. So she can elect not to take title at all if the real estate is worth less than the lien. It is obviours from the confusion and ambiguity contained in your questions that you need to confer with a local attorney experienced in probate law to make sure you don't make any mistakes. Good luck.
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