credit card debt after death

[tgriswold]

What is the name of your state? Massachusetts
My mother recently passed away and left me the beneficiary of her $30,000.00 life insurance policy which I planned on using to pay off her $5,000.00 credit card debt and then split the balance between myself and my 3 siblings, per my mothers wishes.
I recently heard that I may not have to pay her debt off. Is this true? She has no property other than an old car which she signed over to me prior to her death.
Also, will I have to claim the life insurance as income?

 

[seniorjudge]

What is the name of your state? Massachusetts
My mother recently passed away and left me the beneficiary of her $30,000.00 life insurance policy which I planned on using to pay off her $5,000.00 credit card debt and then split the balance between myself and my 3 siblings, per my mothers wishes.
I recently heard that I may not have to pay her debt off. Is this true? She has no property other than an old car which she signed over to me prior to her death.
Also, will I have to claim the life insurance as income?

You do not have to pay a debt that you did not incur.

 

[justalayman]

To expand on SJ's post a bit:

The life insurance is not part of mom's estate and therefor not responsible for any debt the estate may have.

Pertaining to the income issue, I don't know. Others on the site will. Hopefully they will fill you in on that .

 

[sturgbe]

If your mother was the owner of the insurance policy then it IS part of her estate... whether or not the credit card company can attach the life inurance policy (any cash values) is another question. Each state has its own creditor/protection laws. I do not know the law in your state.

The life insurance proceeds will be received income tax free.

 

[justalayman]

If your mother was the owner of the insurance policy then it IS part of her estate... whether or not the credit card company can attach the life inurance policy (any cash values) is another question. Each state has its own creditor/protection laws. I do not know the law in your state.

The life insurance proceeds will be received income tax free.

The benificiary payment is not part of the estate but I will not argue as to the policy itself as being part of the estate. The thing is mom cannot cash it in anymore. Are they not usually payable upon death? Therefor it would have no cash value as a policy.

 

[Betty]

The one thing I can tell you is that life ins. proceeds are tax free.

 

[Betty]

As a follow-up to my reply, I do not believe you are responsible for paying your mother's debts, especially from the proceeds of a life ins. policy.