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Are Heirs Responsible for Their Loved-One’s Debts?

David W. Walker Attorney At Law Sept. 14, 2023

Final demand noticeLosing a loved one is never easy, especially when you start receiving bills for their debt. The idea of paying someone else’s debts can be overwhelming and confusing. 

But, are heirs responsible for the debts of the deceased? The short answer is, it depends. And, unfortunately, it's a common situation—the average American dies with a whopping $62,000 in debt. In this blog, we will dive deeper into this question and explain how it can affect probate or estate administration. 

First thing’s first: whether you’ve been named an heir or executor to a recently deceased debtor, you should know that working with an experienced estate administration and probate attorney is very important. My firm—David W. Walker Attorney At Law—in Columbia, Missouri, is committed to helping families and individuals secure their legacies and protect their futures. If you’re dealing with any estate disputes, don’t hesitate to reach out to us.  

Do Debts Go Away After Passing Away?

Unfortunately, our debts don't automatically get discharged when we die. Instead, our estates are utilized to cover any outstanding debts. And if the assets in the estate are insufficient to cover the debts, then the creditors may write them off. However, this does not mean that the heirs automatically become liable for the debts, as it depends on the type of debt and other factors. 

Secured debts, such as mortgages and car loans, are attached to specific assets that the deceased person owned. The lender has the right to seize and sell the assets to repay the debt. If the sale of the assets isn’t sufficient to repay the debt, the estate will be responsible for paying the shortfall, but the heir will not be held accountable.  

However, unsecured debts, such as personal loans and credit card debts, are not attached to any specific assets. These debts are often paid off from the assets in the estate before any distribution is made to the heirs.  

If an heir was a co-signer on a debt with the deceased person, they would be held liable for the entire debt. Being a co-signer means the person agrees to be responsible for repaying the debt if the other party can’t. The death of one party does not automatically release the other. 

Understanding Probate and Estate Administration

Probate and estate administration is the process of handling the legal and financial matters of a deceased person. This process involves collecting and paying debts, distributing assets, and filing taxes. The process starts when the executor or personal representative of the deceased person is named. 

The Process   

In the estate administration process, the executor must settle the estate and ensure the correct distribution of assets. The first step is usually notifying creditors of the deceased's passing and settling any debts they may have owed. The estate of the deceased is used to pay off any remaining amounts or to settle any legal disputes.  

Executor Responsibilities

The executor is responsible for the entire process, from gathering all of the necessary documents to distributing the assets. They should perform this role with honesty, diligence, and impartiality.  They must keep good records of all financial transactions, including income tax records, bank statements, and debts owed.  

If they do not fulfill their duties correctly, they may be held liable for any financial problems that arise. 

Who Is Responsible for a Deceased Relative’s Debts?

In most cases, inheritors are not responsible for the debts of the deceased person. It is the estate that assumes this responsibility. The assets of the estate are used to settle any debts the deceased person may have had. After those debts are settled, the remaining assets get distributed as outlined in the will.  

However, there are situations where inheritors could be held responsible for their loved one’s debts. This can happen if they co-signed loans or were joint account holders for any credit cards or loans.  

It’s important to note that if the deceased person’s estate is not enough to cover all their debts, then the inheritors may have to pay off that debt from their own resources. Understandably, this can be challenging to navigate. That’s why seeking guidance from a compassionate and knowledgeable attorney in your area is crucial to understanding your rights and options regarding your specific situation.  

What to Do if a Debt Collector Harasses the Relative of the Deceased Debtor

If a debt collector harasses the relative of the deceased debtor, it is essential to take immediate action. It is illegal for debt collectors to harass, abuse, or threaten individuals. If you are being harassed, you have the right to send a written cease-and-desist letter to the collector, informing them to stop contacting you. If the harassment continues, you should reach out to a lawyer immediately. 

Questions? I Have Answers. Reach Out Today.

Losing a loved one is a challenging time, and dealing with their debts can add unnecessary stress and confusion. Understanding your rights and obligations is crucial to avoiding any legal or financial issues.  

If you are in this situation in or near Columbia, Missouri, David W. Walker Attorney At Law can help. I have the experience and empathy to guide you through every step of the probate process. Call me today for some peace of mind. I’m proud to serve those across Columbia and the surrounding areas of Johnson County, Fulton, and Booneville, Missouri.