Outstanding debts still have to be paid during estate administration. This is a task that is often handled by the estate administrator.
These debts will look different from one case to the next. Many people have credit card debt, for example, or outstanding car loans or home mortgages. Others may simply owe tax debts to the government, such as property taxes or income taxes.
Just because someone passes away does not mean that all these debts are automatically forgiven. The person’s estate still owes the outstanding balance, in most cases. The estate administrator can take funds from the estate, communicate with creditors and pay their claims prior to distributing the remaining funds to the beneficiaries.
Debt is not inherited
One key thing for beneficiaries and heirs to remember is that debt is not directly inherited. If a person’s parent passes away with $10,000 in credit card debt, that person is not responsible for paying it back on their parent’s behalf.
However, because money from the estate has to be used to address the debt, it can reduce the total value of that estate. The aforementioned $10,000 will be paid out before the beneficiary receives their inheritance, for instance, so they may receive less than they would have otherwise.
Navigating estate administration
Paying debts and communicating with creditors are just a few of the tasks that will be given to the estate administrator. It is important for them to understand their legal obligations and the steps they still need to take, which is when it can help to work with an experienced estate administration attorney.
