DoI have to use monies given to me as beneficiary to pay off debts?

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DoI have to use monies given to me as beneficiary to pay off debts?

My family seems to think that I have to use monies from the life insurance policy to pay my aunt’s debt. She has a daughter and no real property. Do these debts have to be paid off? Is this money just mine because she had no Will and named me the beneficiary of the life insurance policy?

Asked on February 16, 2011 under Estate Planning, North Carolina

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

A beneficiary is under no obligation to pay the debts of an estate.  In fact, a beneficiary of life insurance proceeds has nothing to do with the estate at all.  The reason is the life insurance proceeds pass outside of probate.  Therefore, a beneficiary is entitled to such proceeds free and clear of any estate debts or similar obligations.


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