Must life insurance proceeds be used to pay debts of an estate?

My mother passed away 2 years ago; she was on medical assistance the last year of her life. There was nothing left of her estate since it had all gone for her care. I got a call from an insurance company and it seems that she had a life insurance policy from the 50’s. My dad had been the beneficiary but predeceased her. I am the only child, retired and 66 years old. Do I have to give the money to medical assistance or declare it in some way? I am waiting to fill out the insurance paperwork to get the check. We don’t know the amount but don’t think it’s much.

Asked on March 1, 2013 under Estate Planning, Pennsylvania


Catherine Blackburn / Blackburn Law Firm

Answered 7 years ago | Contributor

You should consult an elder law attorney in your area about this.  If the life insurance policy does not name you as a beneficiary, it may need to pass through your mother's estate.  In that case, Medicaid will have a claim against it.  If the policy does name you, the proceeds will be paid to you.  Whether your state's Medicaid authority can claim those proceeds as an asset of your mother's estate depends on how your state defines "estate assets" or "probate assets."  Since there are possible criminal penalties for defrauding Medicaid, I suggest you call an elder law attorney in your area.  He or she will know how to handle this and should not charge you much if anything to answer your question.

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