Legal Question in Wills and Trusts in Pennsylvania
Insurance Proceeds & Debt of the Estate
I recently had a relative pass away. She had a will and her estate included a life insurance policy, various assets as well as debts. The beneficiary of the insurance policy was not the estate. My question is....If the various assets of the estate are not enough to cover the debts...Do the proceeds from the insurance policy need to go toward paying the debts before they are distributed to the ''named'' beneficiary(s) of the policy????The debts include credit cards, funeral expenses and taxes...
1 Answer from Attorneys
Re: Insurance Proceeds & Debt of the Estate
No. Where life insurance proceeds are paid to a beneficiary other than the estate (which for tax and other reasons you should NEVER do anyway) the proceeds are not a probate asset and are not a part of the estate. There is no basis on which to hold up payment of the policy and to surcharge the proceeds for estate expenses.
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