Probate

Creditors And Probate

Learn what happens when the decedent leaves debt, whether the beneficiaries are responsible for that debt, and what happens when there is not enough money in the estate to cover debts.

One of the biggest concerns of family members during this time is creditors and probate. Many family members fear that they will be responsible for paying the decedent’s debts after they pass away. This isn’t usually the case, though.

Part of the process of probate, though, is that creditors are notified of the death. Creditors can then use probate as a means of filing claim to any debts they are owed. There is usually a fixed amount of time allowed for creditors in probate to file a claim.

If the creditor’s claim is rejected in probate, they must then sue for the money. If, however, the creditor’s claim in probate is accepted, then the debt is paid with money out of the estate. If there is not enough money in the estate to pay all debts, the court can determine who will be paid in what order. Then, if there are any debts left when the money is gone, assets within the estate may need to be sold (such as furniture, cars, etc.) to pay those debts.

If the creditors claim more debt owed than the estate is worth, after all the money and property is gone, the beneficiaries will not be held responsible. In some situations, a child or other heir may be held responsible for a portion (such as in the event that that child was given a substantial piece of the property or estate shortly before the death), but this is usually the only time this will happen.

This is one of the reasons that probate can be a better experience than trying to sort out all of the decedent’s paperwork on your own. Creditors have limitations through probate that have to be upheld.