When a loved one dies, they probably left a combination of assets and debts behind them. The executor of the estate will have the responsibility of identifying all assets and using them to pay off the debts that the deceased person had. If you believe that your loved one had a significant amount of debt, you may be worried that this will eat away at your inheritance. Even worse, you may be worried that you will inherit their debt.
In most cases, loved ones will not inherit debt, even if it is not settled by the assets in the estate. However, Louisiana is a community property state. This means that surviving spouses in Louisiana may be liable for their deceased spouse’s debts. You must understand how to effectively deal with your loved one’s debts after they pass away.
Paying debts through the estate
Assets that need to go through succession, otherwise known as probate, will be used to pay off debts that the deceased person has acquired. This means that, generally speaking, assets that are not held in a trust or joint account will go toward paying off debts before they pass to a beneficiary. If there are still debts left over after this point, they may be written off completely.
Dealing with shared accounts
Accounts that were opened by the deceased person and another individual can lead to the surviving account holder having liability for the debt. For example, if there are two borrowers named on a credit card, it’s usually the case that the surviving borrower is responsible for 100% of the debt on the account.
If you are acting as the executor of the estate, it is a good idea to notify as soon as possible all creditors that the person has passed away. This will prevent them from taking further action to collect debts, and you will be relieved of the additional stress of dealing with debt collectors. Gaining several death certificates will help you to successfully notify all necessary parties.
If you are confused about debt liability after the death of a loved one, you should take action to get clarity. Acting swiftly can help you to avoid unnecessary stress in the future.