Many adults have debts, and they may not think much about them. One thing that all adults should remember is that their debts don’t just disappear if the person dies. This can leave the decedent’s loved ones scrambling to figure out what to do.
Creditors have the option of filing a claim against the estate when a person dies. Once this happens, the estate administrator will have to pay those debts in accordance with a priority order set by law. After the claims are paid, the remaining assets will be distributed according to the estate plan. If there are outstanding claims and no assets remain in the estate, the estate is insolvent and the debts aren’t paid.
When are loved ones responsible for the decedent’s debts?
In most cases, loved ones aren’t responsible for the decedent’s debts. The exceptions for this are if the loved one was a joint account holder or if they co-signed on the account. In those cases, the individual would be liable for paying off the debts.
What happens if debt collectors contact a decedent’s loved ones?
Loved ones who aren’t legally responsible for a decedent’s debts shouldn’t think they have to pay, even if they’re contacted by a debt collector. Some debt collectors may try to push people to pay. All a person should do if they’re contacted is refer the debt collector to the estate administrator. They should never give any financial information to them.
Beneficiaries count on the estate administrator to handle things related to the estate, including paying the required bills. Because these duties can be complex, it may be beneficial to have the assistance of someone familiar with these matters.