Are You Going to Inherit the Debt of a Deceased Family Member?
By Spokane Probate Attorney, Steven Schneider
When the loss of a family member looms it is difficult, but essential, to determine what debts are owed and where the records of those debts are kept. If you are named in a Power of Attorney or a Will as the person to handle those debts (Executor or Personal Representative), you have a duty to gather this information. Your family member may have already gathered this information or you may have to hunt through a desk or examine a month’s worth of bills to find credit cards, medical bills and other evidence of debt.
Each state has its own laws regarding the handling of estates whether or not there is a Will. In the state of Washington,
- Debt taken on during a marriage can be considered community (or shared) property, even if it was strictly in your loved one’s name. But, please visit with me about your individual circumstances. Sometimes this area is grey: Spokane probate lawyer, Steven Schneider (509) 838-4458 or email at SS@StevenSchneiderLaw.com
- Relatives whose names are not listed on the account cannot be held personally responsible for their family member’s debt; however, a creditor is entitled to collect from the estate left by the deceased.
In order to be paid however, the creditor must file a Creditor’s Claim within four months of the receipt of a Notice to Creditors, which is sent to them through the probate process after the death of the debtor. As a Spokane probate attorney, I can help you with this process.
- If the creditor does not file a claim, the creditor need not be paid.
- If a claim is filed and there is a question about the debt, the Executor or Personal Representative of the estate has a duty to explore the validity of the claim.
- Conversely, even without a claim, if a debt is secured by property of the estate, like a home loan or car loan, heir(s) do receive that property but must pay the debt. If you are in this situation, call me right away: Steven Schneider, Spokane Probate Attorney, (509) 838-4458) or email at SS@StevenSchneiderLaw.com
- A credit card issued by a bank or credit union that has also made a car loan, may also be secured by the car.
- Even furniture, major appliances and tires may be security for the debt.
Most importantly, if there is any doubt about what items are secured by the debt, contact the creditor. If you don’t have copies of the original loan documents already, request them from the creditor. If you are a signer on a joint bank account with the deceased, you may be an owner of the account if it was set up as a joint tenant with right of survivorship account.
- In that case, the account becomes the joint tenant’s property on death and is never in the estate or subject to the estate’s creditors. Again, get the original account documents from the bank.
- If there is anyone beside the deceased listed on the account, each account holder may be held legally responsible if there is any outstanding balance.
- If you are a co-signer (not just an authorized user) the creditor will turn to you if there is outstanding debt.
- Authorized users may not incur debt after the death of the primary account holder. If they do, they will be held responsible for those debts.
Both the estate and the Personal Representative are not liable for the decedent’s debts if no claim is made and the estate is closed after proper Notice to Creditors (see above). As a Spokane probate attorney, I would be happy to help you sort through these questions and more about the probate process. You can reach me at (509) 838-4458 or SS@StevenSchneiderLaw.com.
Debts that the estate itself incurs after the death, such as attorney fees, court costs and costs of the sale of property are administrative expenses and are paid before debts incurred prior to death.
Remember, it is the right of loved ones to spend their money as they need or wish, as shown in the photos in this article. Just try to remember if you have ever signed on as a co-signer on any accounts to which any charges may have been applied. And, sadly, death can happen at any age.