Once you open the estate, the estate is liable to all of the creditors... The house with the mortgage is just the 1st asset to which the bank is entitled, the bank's claim actually goes to all of the assets.
Agree with James that you may be able to work a short sale on the house, but I'd suggest exploring that opportunity and taking a hard look at all of the assets and liabilities before opening the estate. Sometimes it's better to let sleeping dogs lie.
Q: Are these insurance payouts non probate assets?
Q: Would cashing these checks adversely effect med assist eligible for surviving spouse?
Very sorry for your loss, but hoping you had a merry Christmas!
A power of attorney does not authorize you to sign your sister's signature, but only allows you to sign for her on the terms and conditions stated in the written power of attorney. That's why everyone always wants to see the actual power of attorney. Don't do it!
You're not supposed to close the estate until all the $$ has been distributed. The sworn statement filed by the personal representative affirms that all the $$ has been distributed. So what's going on? I dunno!
With all the usual, "I don't know all the facts so I don't really know what I'm talking about" warnings, I would say that the Trustee of the credit shelter trust is not liable for the debts of the surviving spouse. The way a CST works is to claim that the surviving spouse does not own the assets in the CST... that's how you get to use the first decedent spouse's estate tax credit. So it was first to die spouse's money that was held in trust for profligate second to die spouse and those trust...
More here than meets the eye, no doubt... What authority did your brothers have? Where did they get the authority? Is mom competent? Is there a PoA? Is there a guardianship? Many questions, few facts... get to an attorney and get some answers!
The first step is to define goals. Your folks will never go broke on their own, but long term care costs may very well lead them to poverty. How can we avoid that cul de sac? First, by recognizing that avoiding probate/saving taxes/making it easy for the kids are not appropriate goals. Second, by acknowledging that preserving assets for the folks, IS the point. Good planning is a team sport. A successful team needs an elder law attorney, financial adviser/planner and accountant/ tax planner....
The tragedy with most estate "planning" is that the situation you describe is usually ignored. It takes time to explain to families why simply sending checks to beneficiaries is not a good idea, but it is time worth taking. My view is that everyone is in your brother's position, potentially. That's why I always, strongly, advocate that distributions to beneficiaries be made in trust, protected from the creditors and predators...