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My sister died leaving about 35,000.00 in debt, most of it hospital and medical, some credit card debt. I am her only relative. she had a small insurance policy, some of which paid her funeral expenses. Do I use the remaining funds to repay bills, starting with which bills? She had no estate, lived with me past 10 years.
Asked on January 29, 2017 under Estate Planning, Kentucky
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
Life insurance proceeds pass outside of an estate. Accordingly, the named beneficiary takes all and has no obligation to pay the creditors of the estate. In other words, estate debts cannot be collected from such proceeds.
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