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What happens to your parent’s debt after they pass?

On Behalf of | Apr 17, 2020 | Probate |

Nowadays, debt is a reality for individuals at almost any age. They go from paying expensive student loans to mortgages, all the while paying bills on various credit cards. This leaves the average American with roughly $38,000 in debt.

Debt may be a normal part of life now for you and your loved ones, but what happens to debt after your loved one passes away?

Debts are one of the first issues handled in probate

Aside from the overwhelming grief you feel after losing a loved one, you might also face new worries you never thought about before. For many people, one of the most common worries is who is responsible for paying any debts their loved one held in life.

Surviving family members do not have to pay their loved one’s debts in most cases. In fact, repaying debts from the estate is one of the first steps of the California probate process.

It is the personal representative or executor’s responsibility to send a notice to creditors and repay any outstanding debts in your loved one’s name, such as:

  • Medical bills;
  • Mortgage payments;
  • Credit card bills; and
  • Other remaining loans.

The personal representative named in your loved one’s will must do this before they can administer the assets of the estate to any beneficiaries.

In some cases, the personal representative might be held responsible for a debt if they do not send the notice to creditors or pay an outstanding debt from the estate’s funds. This is rare, but that is why it is often beneficial for executors and personal representatives to consult an experienced probate attorney to avoid these liabilities and risks.

Co-owned debts are another story

However, surviving family members may be responsible for their loved one’s remaining debts in a few cases, including:

  1. If the debt is attached to community property; or
  2. If they cosigned a loan with their loved one.

The most common example of this is spouses sharing a joint credit card account. The surviving spouse is still responsible for paying the credit card bill, even if their spouse incurred the debt.

Debt can be a stressful issue to deal with, especially on top of losing a loved one. However, understanding how the probate process handles debt can help reduce your family’s worries.