Debts do not just disappear when someone passes away. They still exist and creditors still want to collect what they are owed. The heirs of those who have passed away with substantial debt are sometimes concerned that this means the debt is going to be inherited and they are going to become responsible for it.
The good news is that this is not how debt works. An adult child could be responsible for a parent’s debt if they were listed on the same account or cosigned on the loan, but not simply because the two are related. If the parent does not pay the debt, the child will not be personally obligated to do so.
How this is addressed by the estate administrator?
The person who has to resolve the situation is the estate administrator. One of the duties that they have is to pay off the debt that the estate owes. This often includes things like income taxes, property taxes, funeral costs, credit card debt and payments for utilities. It could be more extensive, simply depending on that person’s spending habits during their life.
But even the estate administrator does not have to use their personal funds to pay any of this debt. They just use the funds that are available to them in the estate. The estate is responsible for paying back as much of the debt as possible, and then assets can be distributed to the heirs. This may mean that the heirs do not get as much money as they assumed they would, but no one has to pay personally.
Financial issues in probate can be very complex and may even lead to disputes. It’s important for all involved to understand their legal options.