Lisa Marie Presley Had $35 Million in Life Insurance, Battle Brewing

Lisa Marie Presley was millions of dollars in debt at the end of her life, but the moment she died, her estate was flush with cash -- to the tune of $35 million.

Family sources tell TMZ ... Lisa had taken out 2 life insurance policies -- one for $25 million, and another for $10 million. Our sources say there may be a third $10 million policy, but it's unclear if it's lapsed.

What's even more shocking ... our sources say Lisa was trying to cash in the $25 million policy to pay some of the debts she owed, totaling $4 million. We're told she had notified the insurance company and filled out the paperwork to get a lump sum of just $2 million. We're told there was a screwup in the paperwork so the policy was never cashed in.

Our sources say Lisa was $4 million in debt when she died ... of that she owed $2.5 million to the IRS. We've learned Lisa blew through $100 million during her adult years.

When the debts are cleared, there will be around $30 million (assuming the third policy lapsed) to distribute. We're told Lisa's 3 kids, Riley Keough and 14-year-old twins, Finley and Harper Lockwood, were named beneficiaries and will receive equal amounts.

Since the twins are minors, the money will go into a trust. This is where a family conflict is starting to erupt. As we reported, Lisa created a trust in 2010, naming her mom and her former business manager, Barry Siegel, as trustees.

Lisa amended the trust in 2016, cutting Priscilla and Siegel out as trustees and naming her daughter Riley and Son Benjamin in their place. As we reported, Priscilla filed legal docs Friday, challenging the validity of the amendment. Presumably, she still wants to be trustee of what now amounts to a fortune.