When you lose a loved one, not only is it an emotional roller coaster to say goodbye, but the surviving family members are often left with a lot of life logistics that need to be handled after the person is gone. Assets need to be distributed according to the person’s wishes and other financial details need to be settled – such as paying off debts.
How Are Debts Handled After Death?
When a person dies, everything they own at the time of death is part of the estate, including both assets and debts. The estate holds the responsibility for paying the bills. Then the remaining assets are passed onto beneficiaries through the probate process.
As you are structuring your estate to prepare for the future, you can choose an estate executor to deal with the financial details and other necessities after you are gone. For example, if debts need to be paid, then the executor will use your assets to pay off these balances.
If there is cash in a bank account, a simple payment can be made to pay off the balances. Or, sometimes, it’s necessary to sell a property or other valuable asset to come up with the cash necessary to pay these debts.
Can Other People Inherit Your Debt?
In the situation where there aren’t enough assets to pay the debts, then the creditors are out of luck and there is nothing left for your heirs. In some situations, family members might be held responsible for paying the remaining debt balances.
For example, if someone cosigned on a loan for you, the co-signer will need to pay off the loan. Other people who can be held responsible include spouses (in community property states, including California) and joint account holders.
If you are tasked with settling the estate’s debt and fail to comply with probate laws, you could be held responsible for the remaining debt balance.
Legal Help with Settling an Estate
There are a lot of things that need to be managed after a loved one passes away. If you need legal assistance, then our team at Miles & Hatcher, LLP is here to help. Reach out at your convenience to book an appointment: (909) 481-4080.