Crandall, TX Estate Planning Law Firms & Lawyers

If your mother does not know about the debt, then she could not have consented to the debt; therefore, your mother has no personal obligation for the debt upon your father's death. However, upon your father's death, his estate, consisting of his separate property (and his community property, if he resides in a community proper state), is liable for any of your father's just debts. Therefore, upon your father's death, the creditor may sue his estate for payment of the debt. Thus, although your mother may anticipate inheriting all of your father's estate, that estate will be liable to pay the debt, and if the creditor is successful in making its claim against the estate, your mother will, in effect, pay for the debt due to inheriting your father's estate subject to this debt. With that said, if your mother is the direct beneficiary of the life insurance proceeds, the creditor may not reach the $18,000 death benefit from the insurance policy, as long as those proceeds are not payable to your father's estate. If your mother is deceased, then the same principles apply to the children as inheritors of the estate. In no event will your mother or the children be obligated for the debt in excess of the value of your father's estate, excluding the insurance proceeds. So, for example, let's say your father's debt is $50,000, and that he has separate property valued at $20,000 and there is $18,000 in death benefit payable to your mother under the insurance policy. The creditor may go after only the $20,000 of separate assets of your father, and if the creditor is successful in collecting the $20,000 in satisfaction of the debt, that is all the creditor will be able to receive. The creditor cannot sue your mother or the children for the $30,000 remaining on the debt, neither can the creditor touch the insurance proceeds.

A spouse cannot be disinherited, so if the trust tries to disinherit the spouse that spouse can claim the "spousal elective share" which is 1/3 of the "augmented estate." A lawyer who practices in this area can help you determine what every heirs true rights are.

I am assuming there is no will. Without a will and with no surviving spouse, the estate is divided equally among the kids. However, if the house was deeded lawfully before death then it is NOT part of the estate since it was not in the name of the deceased at death. To challenge the transfer that was made before death you will have to prove fraud or breach of fiduciary duty (if the person was guardian or attorney in fact). It will be an expensive undertaking (I would be surprised if it was less than $20,000) so the value of the estate will have to be big enough to cover the costs or you won't have much luck getting an attorney. I always tell folks to wait until they are through their grief before they make a decision on something like this.