Are Heirs Responsible for Their Loved Ones’ Debts?

There are always legal matters involved in the wake of a loved one’s death. Grief can often take a back seat to the probate process. Being informed about what happens to the debts of someone when they pass away may help lessen the stress and anxiety of those left behind.  

If your loved one left debts behind, you may be wondering whether you will be responsible for repaying creditors. If not by you, are their ever debts paid, or do they merely go away? 

At the Law Offices of Lawrence H. Nemirow PC, I help clients in Los Alamitos, California, and throughout Los Angeles County and Orange County, Anaheim, Cerritos, Huntington Beach, Long Beach, Newport Beach, and Santa Ana, navigate the probate process. I protect their interests, and in doing so, give them time to grieve.  

Do Debts Go Away After Passing Away? 

The debts someone accumulated during their life do not just go away after they die. The person who died signed contracts with creditors, agreeing to repay their debts. When that person is no longer here to make payments, their estate is responsible for satisfying the debts. The process of repaying them is handled during the probate administration of the estate.  

How Does Estate Administration Work? 

Many people assume that the purpose of probate is to divide the estate’s assets among its beneficiaries, either as directed in a will or as determined by the court by the law of intestate succession. Although this is one purpose for probate, the second purpose is to satisfy the debts of the decedent from the assets of the estate. Moreover, creditors are paid before the residual is distributed to the heirs.  

Upon the death of someone, a notice of death is filed with the court for probate administration. If there is an executor named in the will, that person will be responsible for the administration of the estate. If there is no will, the court will appoint a personal representative to handle those duties.  

The executor must provide notice to heirs and creditors. Creditors file claims against the estate. The executor inventories all assets and liquidates those necessary to satisfy those claims. If there is no dispute about the debt, the executor will pay it. Otherwise, a creditor must challenge the denial of a claim in probate court.  

It is important to bear in mind that not all assets of the decedent are subject to probate. Those that are not cannot be used to pay the decedent’s debts.  

For example, if your relative made you the beneficiary of their life insurance policy or retirement account, those go directly to you and not through probate administration. The same is true for property with designated beneficiaries, such as a title transfer on death or payable on death.  

Who Is Responsible for a Deceased Relative’s Debts? 

If the estate lacks the assets required to pay all debts, creditors will share what is there and the balance will then go away. In that case, there will be nothing left for the heirs. However, with few exceptions, those heirs will not be responsible for their loved one’s debts.  

One exception is joint account ownership related to the debt. If an heir co-signed with the decedent for a loan or credit card, the heir is contractually obligated to repay the debt in full. If the heir is merely an authorized user on a credit card account, the contract was only signed by the account holder, so the heir is not responsible for paying off the debt. 

Another exception applies if a debt results from co-ownership of real or other property. In this case, the co-owner is still responsible for the debt. For example, a surviving spouse is still responsible for paying the mortgage on the marital home because it is community property.  

What Can an Heir Do If a Debt Collector Harasses Them? 

Of course, creditors want debts repaid. They will do what they can to get them repaid, including contacting relatives of the decedent. This often occurs when the estate lacks the assets necessary to repay creditors in full. 

Creditors can contact relatives to obtain basic information, such as the name and contact information of the decedent’s attorney, executor, or surviving spouse. They cannot discuss the nature, amount, or contractual terms of the debt because the relative did not sign a contract with the creditor. 

The law prohibits a creditor from harassing relatives about debt. The relative should send a certified letter requesting the creditor to cease contacting them about the debt. Once they receive this request in writing, the creditor can only contact the relative to acknowledge receipt or to advise them if they plan to file a collection suit.  

Skilled Representation When You Need It Most 

If you have questions about a deceased loved one’s debts, the administration of their estate, assets not subject to probate, or creditor claims or harassment, I can help. The legal process can be complicated, but I can help you understand it just as I have done for clients in and around Los Alamitos, California. 

Put your mind at ease. Contact the Law Offices of Lawrence H. Nemirow PC today to schedule a consultation.