When someone passes away, their debt does not simply disappear. In general, the estate of the deceased is responsible for repaying any outstanding debt. The assets of the deceased are passed to their estate, and if there is no money or goods left, then the debt will generally not be repaid. An executor can be held personally liable for the debts of the estate up to the value of the estate.
If they distribute the estate and leave a creditor pending, that creditor can file a lawsuit against the executors. This is true even if the executor had no knowledge of the debt. When bills start to arrive after a death, the executor may worry about being held accountable for the deceased person's debts. However, in most cases, you will not have to use your own money to pay off estate debts.
Sometimes there are not enough assets in the estate to pay off all of the debts. In these cases, the Probate Administration Act sets priority for payment of debts. Reasonable funeral and estate administration expenses are paid before any other debt. The executor or administrator is not personally liable for estate debts when properly managed, nor is any beneficiary under a will.
It is important that executors and administrators follow the legal distribution scheme to avoid being personally liable for some debts. The executor is responsible for paying all outstanding debts on the estate's assets. The executor is not personally liable for debts, and the Fair Debt Collection Practices Act prohibits collection attempts against a surviving relative or beneficiary. Gifts and promises from elderly people with dementia, or made under undue influence of another person, may be challenged by estate. Later, it may turn out that there are not enough funds in the estate to pay all of its debts.
In this case, state law sets priority for payment of certain bills over credit card debts. It is always a good idea to consult with an attorney experienced in estate management matters to ensure that you pay all debts properly and do not become personally liable. Creditors of secured debt have the ability to take possession of the item used to secure the debt, or they can receive payment from the estate. When a child under 18 years of age is a beneficiary under a will, the executor may be authorized to administer their share of the estate until they turn 18 or older. Debts incurred by the deceased person while alive, or expenses incurred by the estate after death, must be paid with ownership of the estate. Executors and administrators are responsible for paying all fair debts on the estate before distributing it to beneficiaries. If you suspect that there are not enough funds in the estate to pay off all debts, be careful not to pay anything with your own money or with estate funds.
The executor can be held personally liable for non-payment of debts in accordance with established law. The executor of your estate will gather all assets and make an accounting of all liabilities. The executor or administrator is responsible for distributing the estate to legally authorized persons to all or part of the estate. An executor or administrator who fails to do this may be personally liable for amounts improperly transferred from the estate. In New York State, there is a creditor period of seven months from date of appointment as executor, not from date of death. Credit card debts are last debts that must be paid if executor believes that debts exceed assets in estate.
Executor must make inventory of deceased assets (car) and debts (car loan, credit card balance, mortgage etc.).The law imposes a good faith standard on executor to determine payment of claims against estate.