Some people assume that a person’s debts vanish if the account holder passes away, but that’s not how it works. Instead, it’s possible that the estate of the decedent will have to pay for the debts. The estate administrator is responsible for handling those payments.
Part of the duty of the administrator is to liquidate assets in the estate to pay the bills they’re required to pay. The administrator will then distribute the remaining assets in accordance with the estate plan. If there’s not anything to liquidate and no money in the estate, the estate is insolvent and won’t be able to pay those bills.
Are the decedent’s loved ones ever responsible for paying debts?
There are limited times when the decedent’s loved ones are responsible for paying these debts. This includes instances in which the loved one is a co-signer or a joint account holder on the account. Unless those circumstances are present, the loved one likely doesn’t have any responsibility to pay the debt.
If a loved one is contacted by a creditor and they aren’t liable for the debt, they should direct the creditor to the estate administrator. The debt must then be handled in accordance with applicable laws.
Ensuring the estate is handled properly is critical because missteps can lead to delays and an increased cost for the beneficiaries. It may be best for individuals in this position to work with someone who understands estate planning laws and how they apply to the matter.
