As beneficiary of my brother's life insurance would I have to use it to pay off any debts?
Full Question:
Answer:
The executor named in the will will be granted authority by the court in the probate process to handle the decedent's affairs, such as paying debts owed and distributing their assets. It is the executor's responsibility to collect and distribute the property of the decedent and pay the decedent's creditors.
A deceased's debts should be paid with the property in their estate (the property left at their death). Heirs don't inherit the decedent's debts unless they created a co-signor/guarantor/surety/joint account relationship to the debt, so that the heir's name is on the debt also, and it isn't a separate debt. Only after the debts are paid will the remaining assets be distributed among the beneficiaries of the will. Be advised that when an heir inherits property that is collateral for a debt -- for example, a car that is not paid for or a house with a mortgage -- the debt comes with the property. If there is insufficient money or assets to pay all creditors, then the estate must be divided up as equally as possible, with secured creditors receiving priority. This means that if the deceased died with little or no money in their accounts and didn't own a home, unsecured debt, such as credit card debt will not be paid to the creditors.
The executor has a duty to act in a trustworthy and authorized manner in handling the estate of the decdent. If the executor acts outside the scope of his/her authority, in bad faith, or against the wishes of the decedent, the exectutor may be personally liable.
The following are SC statutes:
§ 62-3-712. Improper exercise of power; breach of fiduciary duty.
If the exercise of power concerning the estate is improper, the
personal representative is liable to interested persons for damage or loss
resulting from breach of his fiduciary duty to the same extent as a
trustee of an express trust. The rights of purchasers and others dealing
with a personal representative shall be determined as provided in §§
62-3-713 and 62-3-714.
§ 62-3-703. General duties; relation and liability to persons interested
in estate; standing to sue.
(a) A personal representative is a fiduciary who shall observe the
standards of care applicable to trustees as described by Section 62-7-933.
A personal representative has a duty to settle and distribute the estate
of the decedent in accordance with the terms of a probated and effective
will and this Code, and as expeditiously and efficiently as is consistent
with the best interests of the estate. He shall use the authority
conferred upon him by this Code, the terms of the will, and any order in
proceedings to which he is party for the best interests of successors to
the estate.
(b) A personal representative shall not be surcharged for acts of
administration or distribution if the conduct in question was authorized
at the time. Subject to other obligations of administration, an
informally probated will is authority to administer and distribute the
estate according to its terms. An order of appointment of a personal
representative, whether issued in informal or formal proceedings, is
authority to distribute apparently intestate assets to the heirs of the
decedent if, at the time of distribution, the personal representative is
not aware of a pending testacy proceeding, a proceeding to vacate an
order entered in an earlier testacy proceeding, a formal proceeding
questioning his appointment or fitness to continue, or a proceeding for
administration under Part 5. Nothing in this section affects the duty of
the personal representative to administer and distribute the estate in
accordance with the rights of claimants, the surviving spouse, any minor
and dependent children, and any pretermitted child of the decedent as
described elsewhere in this Code.
(c) Except as to proceedings which do not survive the death of the
decedent, a personal representative of a decedent domiciled in this State
at his death has the same standing to sue and be sued in the courts of
this State and the courts of any other jurisdiction as his decedent had
immediately prior to death.