Making The Complex

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When succession includes a loved one’s debt

If a will has designated you executor or a succession judge has appointed you administrator of a loved one’s estate, you may be feeling overwhelmed by your responsibilities. Not only must you gather and protect the assets in the estate, but you must deal with the heirs who may be clamoring for their inheritance.

What they may not understand is that the estate is responsible for satisfying any outstanding debts your loved one’s creditors may demand. Even if succession is not officially opened for the estate, you can begin to streamline the process for dealing with your loved one’s creditors.

Sorting through the debt

Your first step is to list all of your loved one’s debts. Unfortunately, this may not be easy. Not everyone keeps careful ledgers and systematically organizes their bills. You may have to search through piles of mail, bank statements and online accounts to get an accurate listing of what your loved one may owe. Some of the most common debts to deal with during succession include the following:

  • Credit cards
  • Mortgage or rent payments
  • Personal loans
  • Auto loans
  • Loans against insurance policies or retirement accounts

You may also want to continue paying utility bills and insurance premiums until the conclusion of succession so the house does not stand empty and unprotected, which may lower its value or invite vandals. Your loved one may also have storage space for which you will want to continue paying rent until you can remove and distribute the items. Taxes are a priority debt, so it is likely you will be completing your loved one’s final tax returns and potentially filing the correct forms for federal estate taxes.

Inheriting a mortgage

While it is possible that you may have to liquidate some of the estate’s assets to repay outstanding debt, you may also be able to negotiate with some of the creditors. However, a mortgage or auto loan may be something on which the heirs will have to decide. It is possible a beneficiary will not want to inherit a house with a mortgage or a vehicle with payments due. Any who decide to keep such assets may have to refinance the loans.

Dealing with someone else’s creditors during succession can be tricky. It is not always easy to know if a creditor’s claim is valid or the most appropriate steps to take to satisfy an outstanding debt. Fortunately, skilled succession attorneys deal with these issues every day and are a valuable resource for someone charged with handling a loved one’s succession matters.


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