QUESTION
When she passes and the funeral is paid for, would the nursing home be able to take the remaining balance before it was put towards her mortgage?
Asked on Feb 20th, 2015 on Estate Planning - Michigan
More details to this question:
My mother has an outstanding nursing home bill. She only has about $30,000 in life insurance.
3 ANSWERS
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Who is the named beneficiary of her life insurance policy? Whomever it is takes the $ after her death and generally is not liable to pay for her funeral, the nursing home or her mortgage.. As to the rest of her estate, her savings, any equity in her house, etc. that should be first used to pay her funeral and then, only then, should it be used to pay her creditors. Please contact an attorney to be sure.
Answered on Feb 23rd, 2015 at 1:36 PM
Unless the life insurance policy has been pledged to the nursing home, as to the life insurance proceeds (assuming they are payable to your mother's estate and not a named beneficiary), both the nursing home and the mortgage lender are general, unsecured creditors. This means the estate could pay those proceeds to either creditor. Of course, if they are paid to the mortgage lender, then the equity in the home increases and the nursing home would have a claim on that equity.
Answered on Feb 23rd, 2015 at 4:44 AM
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If she passes, why should she pay her mortgage?
Answered on Feb 23rd, 2015 at 4:42 AM