The loss of a loved one is often a traumatic time, mostly because of the emotions that come with the loss. While you’re grieving, you may face having to deal with your loved one’s debts. It’s critical that you understand how these are handled so you don’t get stuck taking responsibility for debts that aren’t actually yours to pay.
When a person dies, their estate moves into probate. During this process, the administrator of the estate is responsible for taking care of the decedent’s affairs. One of these duties is paying the debts as required by law.
How does an estate pay a decedent’s debts?
An estate pays a decedent’s debts by using the available cash or liquidating the assets. These debts must be paid in a specific order that’s set by law. There’s a chance that some debts will go unpaid. If the estate doesn’t have any available cash or assets, it’s insolvent, which means that there’s nothing left to pay debts.
Are loved ones ever responsible for a decedent’s debts?
Loved ones are typically only responsible for a decedent’s debts if they’re a co-signer or joint account holder. This doesn’t mean that debt collectors will accept that they won’t be paid. Some may try to contact loved ones to try to get a payment. In those cases, the individual who’s contacted should simply direct the creditor to the estate administrator.
Determining how to handle probate administration can be challenging, so it’s critical to work with someone who understands what’s required. This can help to ensure that beneficiaries receive the inheritance they’re due.