When someone passes away, even if it was an expected passing and they made some plans in advance, there’s certainly a chance that they’re still going to have different outstanding debts. These could result in creditor claims against the estate as various creditors try to get the money that they are due.
For instance, an elderly person who passes away may still have to pay their property taxes or income taxes at the end of the year. Even if they’ve paid off their home so they don’t have a mortgage, they may still need to pay utility companies for things like electricity, water or gas. Many people just have credit card bills. Even if it’s not a high level of debt, they may have thousands of dollars that have to be paid off at the end of the month. So, who is in charge of doing this?
The estate executor
Beneficiaries are often concerned that they’re going to inherit this debt, as if they would suddenly have to pay their parents’ credit card bills after their death. This could be impossible for many beneficiaries, and they may not want to suddenly take on a lot of financial obligations. After all, they didn’t have anything to do with charges on the credit cards or the lack of tax payments.
The good news is that the estate executor or estate administrator generally needs to pay off the debts, so beneficiaries aren’t directly responsible. Instead, the executor just gathers the financial assets from the estate. Prior to distributing them in accordance with the estate plan, they pay off these remaining debts. This satisfies the creditors, and everyone can move forward without any further obligations.
If there are any questions during the probate process or if disputes arise, those involved must understand what legal steps to take.