Who Is Responsible For The Debts Of A Deceased Person?


Video Summary


Who is responsible for the debts of a deceased person? The deceased person is – if they signed for a service or a credit card, they're the ones that have the liability and, therefore, if they have an estate, their estate assets are the ones that would have to be used to pay their creditors. If no one has signed as a co-obligor, or to be responsible along with the deceased person, then there isn't anyone that has to pay the debts.


So if you have a loved one, or any person who's passed away, and they have a will and you're named as a beneficiary or the personal representative, you need not worry about being responsible for their debts. That's the whole purpose of the probate process, wherein you send out – open up a probate estate proceeding with the Court. You send a notice to the reasonably ascertainable creditors – which you check the mail, and if they sent a bill – sent 'em a bill – and you send them a notice that they're to file a claim within the probate proceeding, or in the Court proceeding. And so they have three months in which to do that from the date that the first notice is published. So it's important that you send 'em this notice.


And so then, once the estate is wound up, you put the claims in a category. And there's priority as to which claims which get paid first out of the estate assets. The first category of claims that gets paid first is the fees of the personal representative and the attorney who are handling the administration of the estate. Next in line is the funeral bills, and the bills of the last illness, and burial. Then we have – you have the federal tax liens – if there's any taxes that they owe – and then you go on down any number of other categories.


Credit cards and general bills are a Class 8 creditor. So the first money out of the estate, before anything's paid to the beneficiaries, is paid to the Class 1, 2, 3 creditors, in that order. If there aren't enough assets to pay all the creditors, the creditors do not get paid, or they get paid pro rata, meaning that they only get a portion of their claim.


The personal representative, or the executor –we now call them personal representatives – has no personal obligation to pay those bills, with the exception of the Internal Revenue Service, which they need to take certain precautions to verify what the tax bill is. But if they do that, they're not responsible for the new taxes. And so the beneficiaries nor the personal representative has any personal liability whatsoever for a deceased person's bills or debts.


Now if, however, you – like, say, in the – if you have a spouse that passes away and you've signed on the credit card or signed any bills that you're a responsible party, or agreed to be obligated, well, you have continuing obligation because you signed along with the deceased person to be obligated for that.


But that's a question I often get asked, is, "Am I responsible for my spouse's debts when they pass away?" And the answer is no. You're not, not unless you signed to be responsible. That even includes their hospital bills and any other bills that they have liability for. That is with a big asterisk, there, that says, "unless you signed and said that you would be responsible for them."


So if you have – if there's a person who's passed away and they have lots of bills and have few assets, and you're the beneficiary, well, don't hesitate to call me, and I'll be glad to discuss the probate of the will. There are certain assets which are exempt from the claims of the creditors.


So give me a call at (727) 847-2288.