Many people pass away with debts that still need to be covered because debts don’t go away when a person dies. In most cases, the debts will have to be covered as part of the probate process. This is handled by the estate administrator.
Estates can only pay creditors if they have the money or assets to cover the debt. If the estate doesn’t have the money or assets to pay the debts, they won’t be paid because the estate is insolvent. Beneficiaries will only receive an inheritance if there’s money or assets remaining after debts are paid.
What should loved ones do if they’re contacted by creditors?
In most cases, loved ones aren’t liable for the debts of the decedent. If they’re contacted by a debt collector, they should direct the creditor to the administrator. They shouldn’t ever provide the debt collector with personal or financial information.
There are limited instances in which the loved ones may have to pay the debts. These include if the loved one was a joint account holder or a co-signer for the account. In those cases, the individual would be liable for the debts.
All debts should be paid according to the order established by applicable laws. This is only one of the duties that the administrator has. Anyone who’s handling this responsibility should ensure they understand what they must do. It may behoove them to have the assistance of someone familiar with these situations so they can be sure they’re getting everything handled in accordance with the law.