The Pew Research Center reported last year that a record 61 million Americans live in multi-generational households. That’s nearly one-fifth of the population. This means finances of aging parents, grandparents and adult children and grandchildren are sometimes intertwined. This does not necessarily mean that upon a loved one’s passing that debts will automatically be transferred to relatives, even those you live with. However, probate litigation attorneys in Fort Lauderdale recognize many people don’t fully understand the debts for which they may be responsible, and which they are not.
In general, no person is responsible for the debts of another while the debtor is alive – or dead. There are exceptions to this, though. For instance, spouses are often held accountable for each other’s medical debts in life. Relatives who co-sign or are also listed on loans may be responsible – that goes for student loans, car payments, mortgages, credit cards, etc. In death, a debtor’s outstanding obligations typically become the responsibility of “the estate.” The estate consists of all property, savings and debts. The process is much easier if there is a living trust in place, but if not, probate is the process of sorting through how those debts will be paid off and how property will be transferred to living beneficiaries.
To protect their inheritance, family members may need to start dealing with debts before probate has officially opened. That means keeping current on those administrative bills (i.e., mortgage, HOA fees, property taxes, utility bills, storage fees, etc.) until the probate estate is opened, and sometimes until the estate closes. Then there are the “final bills,” which can include income taxes, cell phones bills, credit card bills and retirement accounts. Beneficiaries of an estate probably should not pay out these final bills until the personal estate representative/ executor has settled the estate. A probate litigation attorney can help you sort through the details and determine the best way to protect your inheritance while still ensuring the estate meets its obligations.
In situations where beneficiaries pay some or all of decedent’s bills prior tot he opening of the estate, the personal representative can later reimburse them – unless the beneficiary assumes mortgage payments on a property that beneficiary will inherit or refinance (as allowable under the Garn-St. Germain Depository Institutions Act of 1982).
For the most part, though, once a person’s estate is in probate, creditors will have a chance to file a claim against the estate. So assuming you never co-signed or guaranteed any of that debt (and assuming you aren’t married) chances are slim-to-none you will be responsible for it. That means if there isn’t enough money in the decedent’s estate to pay those outstanding debts, they will generally remain unpaid, and family members won’t be responsible for them.
A probate attorney can help individuals in mapping out their will and give testators and beneficiaries a strong sense of what the obligations will be and which assets will be remaining – prior to testator’s passing (assuming a major illness, long-term care requirement or other issue doesn’t eat into those savings or expand that debt).
Call Fort Lauderdale Injury Attorney Richard Ansara at (954) 761-4011. Serving Broward, Miami-Dade and Palm Beach counties.
Additional Resources:
Is My Family Responsible for My Debts? January 2013, By Lynnette Khalfani-Cox, AARP
More Blog Entries:
Florida Probate Litigation Alleging Elder Financial Exploitation Results in $34M Damage Award to Estate, Feb. 13, 2018, Fort Lauderdale Probate Litigation Attorney Blog