My girlfriend lost her grandmother to a stroke several months ago, and as grandma's last living relative, became administrarix of the estate. Unfortunately, my girlfriend had to administrate her mother's estate as well a couple years ago, so she does know the process. Grandma had debts to the Credit Cards, Retirement Home, and Mortgage. Selling grandma's house essentially broke even with the mortgage and a small life insurance policy was expected to almost exactly cover the credit card bills.

Turns out, the life insurance paid out 50k more than expected. In addition, as administratrix my girlfriend by law had to send letters to all the creditors rquesting they make claims to the estate by a deadline. The deadline has passed and a credit card that was owed ~10k never replied.

#1. How legally responsible is my girlfriend on behalf of the estate for the debt unclaimed?

#2. Since my girlfriend is the sole heir the leftover money goes to her. How does one spend 50k most advantageously? She has a used Honda Civic that could be paid off. Grad school is fully paid for plus 20k yearly stipend (she will be going to school for 4.5 more years). She has less than 2k credit card debt. Zero in savings, essentially. We are planning on moving in together when our leases are up and engagement is a matter of time. I have 12K in school loans in repayment and can afford to pay myself. I am already working as a Civil Engineer.

Is it financially sensible to pay off my school loans (4.77%). I don't expect her to at all, but if that sets our future up better she would not mind.

Any suggestions

1/17/2008 10:03:16 AM

Quote :

"How does one spend 50k most advantageously?"

Pay off the credit card debt.
Put away 3 to 6 months living expenses in a money market or high-yeild savings.
Set up a Roth IRA if she doesn't have one and contribute the max every year (being able to do this with that money while in grad school will put you light years ahead).
Invest some elsewhere or pay the car loan off (if she isn't all about the stock market).

About the 4.77% school loan, you can make a lot more than the 4.77% you are paying by investing in almost anything (hell even some money markets/savings pay moret than that).

[Edited on January 17, 2008 at 10:23 AM. Reason : .]

1/17/2008 10:21:51 AM

Who was the beneficiary of the life insurance? Life insurance is generally not included in the probate process and not up for grabs from creditors. She most likely should have her work double checked by an attorney, to cover her bases. It would not be very expensive, since it seems the estate is ready to file the final accounting and close.

In the event that she does end up with the $50k, she needs to invest it in some kind of fund and need to see a financial planner for this. I would pay off the credit card and not charge unless necessary.

Don't ever pay off a student loan at such a low interest rate. If you get married, it is better to have your loan debt and deduct the interest (which is very low). Student loan interest is an above line deduction. The 50k will earn hopefully 8% more a year than the interest rate of your loan and could be used for your home/retirement/emergency fund.

1/17/2008 10:24:55 AM

a 4.77% school loan should be one of the last repayed.

there is such a thing as debt that's ok, when that money could be used else where more advantageously.

1/17/2008 10:25:17 AM

I like Bud's proposals. I did not see that there was a car to pay off. Pay that asap.

1/17/2008 10:26:28 AM

I don't know much about the legal requirements of serving as the beneficiary of an estate and notifying creditors.

But, with what is left over, I would agree with everyone's comments posted already. However, before you do anything, consult a financial advisor. They can help you make wise decisions that will benefit you the most. Try to put about 5-6 months of living expenses in a savings account that's easily accessible to serve as an immediate cushion if you need it.

A Roth IRA is a damn good idea, especially since she's still in grad school. And don't pay off the student loans. 4.77% is next to nothing, so that money can be best used elsewhere for the time being.

1/17/2008 10:44:46 AM

These questions are best answered by a lawyer.

1/17/2008 12:11:21 PM

50,000 is not a whole lot today. It will be gone before you know it if you use it to pay off all these random debts like credit card, car etc. IF you don't have outstanding debts and can afford to pay more than just the minimum payments on CC, car etc and you aren't being raped with interest then just invest the $50,000 as others have said. Don't spend it.

1/17/2008 12:28:00 PM

I didn't read all the replies, but

Quote :

"She most likely should have her work double checked by an attorney, to cover her bases."

Definitely do that.

1/17/2008 1:29:02 PM

ATTN: KyleAtState

I hold a FINRA Series 7 and 66 license and have worked in financial planning for a couple years now, and here's exactly what I'd tell a friend:

Tell your girlfriend the best advice is not to spend ONE DIME until she has met with several licensed, certified financial planners about her options.

Without knowing the rest of the details of her goals and current situation, it'd be unprofessional to make any recommendation. Following any recommendations made by unqualified people who don't know the details of her tax situation or her financial goals would rank among the worst decisions she could ever make. And that's in the best circumstances.

Make sure she does her homework in selecting a planner, too.

[Edited on January 17, 2008 at 2:56 PM. Reason : ...]

1/17/2008 2:39:43 PM

Pay off the car and invest the rest starting with a roth ira.

1/17/2008 2:46:46 PM

thanks for the tips so far

i told her to speak to a lawyer before i even posted


the life insurance has already been paid and the check deposited in the estate account
i think she has already mailed payments to the creditors thats filed claims

1/17/2008 9:28:41 PM

evidently grandmas benificiaries on the life insurance were her son and daughter who are both now deceased. she never was added my girlfriend (her next of kin) after they passed. thus the check was made out to the estate.

1/17/2008 11:49:47 PM

^^^ and the credit card debt

then don't rack up any more of it


take your sweet time to pay off those school loans--invest the money in stocks (index funds) instead.

actually, after paying off the CCs and the car (depending on what interest rate the car is at, but it's prob high enough to justify paying it off), set aside a few thousand as an emergency fund. This really means no-shit emergency--i.e., not for any sort of discretionary spending. The idea is that having this money socked away prevents you from resorting to credit cards if the shit hits the fan. I've only dipped into my emergency fund once, and that was to help cover ~$6000 of legal expenses from my stupid fucking paternity case. I didn't use it to replace the tires on my car a few months ago ($800), or replace my broken computer ($900), or replace my worn-out clutch ($1100).

Oh, and keep that fund in a money market account...should be able to get 4-5% on it and still access it any time you want.


after you pay off CCs, the car, and establish an emergency fund, invest the rest in stocks. A large chunk should prob go into an S&P 500 index. A little (10-15%ish) should go into emerging market indices and the like. The rest can be spread across various other classes...this allocation varies with personal preference and different schools of thought, and is beyond the scope of this thread anyway...but suffice it to say, I'd dump the rest into the stock market--with the maximum amount I could ($5k/year) marked as a Roth IRA.

1/18/2008 3:52:41 AM

i would like to add:

cocaine
strippers
booze

1/18/2008 11:34:53 AM

Quote :

"Pay off the credit card debt. "

bullshit. credit cards are an unsecured loan. as long as it's only in the deceased person's name, then legally no one can be held liable for it.

1/22/2008 4:22:11 PM

Pretty sure there were referring to the girlfriend.

"She has less than 2k credit card debt."

1/22/2008 4:30:34 PM

oh, ok. i just saw this when i did a quick read

Quote :

"Grandma had debts to the Credit Cards"

1/22/2008 4:35:19 PM

Quote :

"ATTN: KyleAtState I hold a FINRA Series 7 and 66 license and have worked in financial planning for a couple years now, and here's exactly what I'd tell a friend: Tell your girlfriend the best advice is not to spend ONE DIME until she has met with several licensed, certified financial planners about her options."

Ha...

That's like saying, "I'm a personal trainer...don't go to the gym until you consult (spend money) with one of us"

[Edited on January 22, 2008 at 7:28 PM. Reason : .]

1/22/2008 7:27:48 PM

The estate can be legally liable for Grandma's credit cards and that liability can be imputed in certain situations. It all depends on complicated questions.

Go see the lawyer, close the estate and then go to the CFP. CFP can help you avoid bad decisions and tax consequences.

If I was in this situation, I would still see a lawyer and use a CFP. My husband has the educational background of a CFP and will take the Series 6 as soon as his job pays for it. I would still use someone else.

1/28/2008 11:53:37 AM

I hate to think about inheritance.

1/28/2008 3:25:21 PM