When a loved one dies, do their debts die with them? The answer is, it depends. Here are some things you need to know about debts after the death of a loved one:
Are heirs responsible for debts? Creditors have become increasingly aggressive in trying to collect on a deceased person’s debts from family and heirs, but that does not mean you have to pay. Unpaid debts to creditors are usually paid out of the estate; if there are not sufficient assets in the estate to pay off the debt, then the creditors are generally out of luck. Exceptions to this are if someone is jointly liable for the debt and in community property states, if the decedent was married the spouse could be liable even if he or she was unaware of the debt.
Direct creditor inquiries to estate executor. A decedent’s debt obligations transfer to his or her estate, so if you receive a debt collection call you should direct all inquiries to the estate executor.
Notify credit bureaus and creditors. The executor of the estate is responsible for notifying the three major credit bureaus and all the decedent’s creditors of the death. The executor should obtain a copy of the decedent’s credit report to ensure all outstanding debts are accounted for, and should also request that the credit reporting agencies flag the decedent’s account as Deceased to help prevent identity theft.
Find any co-signers. If the decedent had a co-signer on any secured or unsecured debt, that co-signer is equally responsible for the entire debt. Authorized users of credit cards are not liable, since they did not originally apply for the credit.
Stop using credit cards. Authorized users of credit cards should stop using a decedent’s card immediately. Using the credit card of a decedent can be considered fraud. If the decedent was your spouse, you will need to ask the credit card issuer.
The Estate, Trust & Elder Law Firm, P.L., provides attorney services ranging from estate planning for young families to advanced and crisis long-term care for seniors. Contact us for your free initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.