Dealing with debt after death - advice?

Silvertabby

“ would my father in law be expected to use his life insurance payout to cover expenses and debts?
”
Assuming that he is the policy owner - not the deceased mother in law - then no. It's his money and he is no more liable to pay off her debts with it than with any other money he might have.

If the late mother in law owned the policy and it was not written in trust, then the proceeds would most likely be paid into her estate, and could therefore be used to cover debts. Posted by Malthusian

True for debts, but not quite for funeral costs. If there is enough money in the estate to pay for the funeral, then that must be paid for before the credit cards can be settled. ie, if the estate only has the funds to pay for the funeral, then the credit card providers won't be entitled to anything. BUT - what a lot of people don't seem to appreciate - is that when the surviving spouse/family make the funeral arrangments, the person who signs the undertakers contract is the one who is legally and personally responsible for payment. If there isn't enough money in the estate to pay for all or some of the funeral expenses, the debt can't be written off in the way the credit card debts can be. It becomes the responsibility of the person who signed the contract.

konark

This would be a tricky estate to administer. True, after funeral costs your MIL's estate may well be cash insolvent but she did jointly own a house.

Whilst in normal circumstances this passes to the surviving joint owner outside of the estate, the law does provide for creditors to apply (within 5 years of the date of death) for an order severing a joint tenancy stopping a home going to the surviving spouse automatically.effectively bringing the value of half the equity in the house into the estate to be distributed to creditors.

Whether creditors apply for such an order would probably depend on the amounts owed.

Also remember that if the executor pays some debts and not others they will be liable for any mismanagement of the estate.