Mothers assets, dept, and life insurance

[JohnnyRingo54]

What is the name of your state (only U.S. law)? Kansas
Mother-in-law died leaving fewer assets than dept. She was on Social Security and Medicare, her bank balance and Social Security death benefit is far less than her outstanding dept (unpaid bills are electric, phone, doctor, hospital, etc). Her daughter (my wife) is performing the executor function for her mothers affairs.
Q. Is it at the discretion of the executor how the assets be divided among the debtors?

Mother-in-law had a small life insurance policy that’s being used to cover funeral cost. the policy did not cover the entire funeral expense. The additional cost is being paid for by her family.
Q. Is the family entitled to any of the assets to recover the funeral cost not covered by the life insurance?

Mother-in-law had stated there was a 2nd life insurance policy that her daughter is the beneficiary for. Have yet to go through all her paper work to locate information on a 2nd policy. We don’t know if exists however if found....
Q. As the executor and beneficiary is the daughter liable to apply the payout of that policy to further settle her mothers dept or is she entitled to keep it.

 

[anteater]

Q. Is it at the discretion of the executor how the assets be divided among the debtors?

No. Kansas statutes prioritize claims against the estate by classes. Within a class, all creditors are treated the same:

59-1301. Classification of demands. If the applicable assets of an estate are insufficient to pay in full all demands allowed against it, payment shall be made in the following classified order:

First class, the expenses of an appropriate funeral in such amount as was reasonably necessary, having due regard to the assets of the estate available for the payment of demands and to the rights of other creditors, and, following the allowance of such expenses, any claim for medical assistance paid under subsection (e) of K.S.A. 39-709 and amendments thereto. Any part of the funeral expenses allowed as a demand against the estate in excess of the sum ascertained as above shall be paid as other demands of the fourth class.

Second class, the appropriate and necessary costs and expenses of administration and the reasonable sums for the appropriate and necessary expenses of the last sickness of decedent, including wages of servants.

Third class, judgments rendered against decedent in the decedent's lifetime, all judgments or liens upon the property of the decedent shall be paid in the order of their priority.

Fourth class, all other demands duly proved, including the cost of any appropriate tombstone or marker or the lettering thereon, in such amount as may be reasonably necessary, but whether there shall be an allowance, and if so the amount thereof, shall be determined by the court before any obligation therefor is incurred, except that debts having preference by the laws of the United States and demands having preference by the laws of this state shall be paid according to such preference.

Except as provided by this section for the first class of demands, no preference shall be given in the payment of any demand over any other demand of the same class, nor shall a demand due and payable be entitled to preference over demands not due.

Q. Is the family entitled to any of the assets to recover the funeral cost not covered by the life insurance?

Under the above, I would say yes.

Q. As the executor and beneficiary is the daughter liable to apply the payout of that policy to further settle her mothers dept or is she entitled to keep it.

If your wife is the beneficiary, then the proceeds belong to her. If, for some reason, the proceeds are payable to the estate, then the funds would be available to pay creditor claims.