Hi,

My grandfather past away couple months ago and he left many debts behind. My grandmother (still living) had joint accounts with my grandfather and she has her own debts too. My grandmother unfortunately can not pay off the debts.

My questions are, what are my grandmothers' rights? The insurance money that she received is less then what she owes, does she have to give that up to pay off my grandfather's debt? Should she file for bankruptcy and if she does, will the creditors take the life insurance that was left for her, to pay off their outstanding balances?

R.L

It depends on whether she was signed on the debts or not. She is responsible for any debts that she co-signed. She is NOT responsible for any debts solely in his name.

What happens in the case of a death with debts is that proceeds of the estate must be first used to pay off the debts, then distributed to the heirs. However, any assets held as Joint tenants passes to grandma outside the estate. Also any life insurance she received as a beneficiary is also not part of the estate.

So if the estate is not enough to cover the debts the creditors are out of luck.

My grandmother does not have an estate, she rents a home and there is no assets either. Could she still file for bankruptcy and would their be any problems with her life insurance? Meaning, is their any way that creditors can take the life insurance from her? This is all she has at this point.

Thank you so much for your help.

R.L

R.L

One leaves an estate, its not something one has. If your grandfather didn't leave an estate then his debts died with him.

However, if your grandmother declares bankruptcy the insurance proceeds become part of her assets which would be used to pay off her debts.

Life insurance goes to the benificiary direct and has no requirement to pay the debts of the insured. But since this is the wife, she may at this time be personaly liable to pay the debts, as his wife. So if she has personal money, ( which the life insurance is) she would be required to pay her money to pay his bills.

If you file bankruptcy you are allowed to keep some money but not a lot, ( you did not give any amounts) so she would have to pay out all but what she is allowed to keep/

If this money was rolled over into a annunity retirement, I am not sure how that would be treated, but talking to a bankrupty attorney would help you with that info