Many adults have debts throughout their lives, but they may not think much about what will happen to those debts if they die. Unfortunately, that would mean that their loved ones would have to deal with the debts.
A person’s debts don’t automatically die when the account holder does. Instead, these accounts will typically have to be dealt with by the decedent’s estate.
How does the estate handle debts?
The estate administrator will give creditors a chance to submit their debts to the estate. These must be paid in a specific order that’s set by law, and that must happen before the beneficiaries receive anything from the estate.
There’s a chance that some debts won’t be paid through the estate. The estate can only pay out what it has in assets, which may be liquidated as needed. Once the estate is insolvent, no more debts can be paid.
Are family members ever liable for these debts?
There are very limited situations in which the family members of a decedent may be liable for the debts. These include accounts that have a co-signer or joint account holder. If the loved one is neither of those, they likely won’t be responsible for paying off the account.
Some unethical debt collectors may try to contact loved ones to get payments. If that happens, the individual should send the debt collector to the estate administrator. They shouldn’t ever give out their own personal or financial information.
Having to handle the probate process can be challenging for some estate administrators. It may be beneficial for them to work with someone who can explain everything to them and help them as they work through the process.