Who pays a decedent’s debts?

Some people don’t have a chance to pay off all their debts before they pass away. This leaves the question of who will pay for those debts when the person dies. The answer to this isn’t always easy, but taking the time to review the circumstances around the debt may make it a bit easier to determine how it should be handled. 

One thing to remember is that loved ones don’t have to pay the decedent’s debt unless they’re a co-signer or joint account holder. Instead, these debts are the responsibility of the estate. This is only possible if the estate is solvent. If the estate is insolvent, any remaining debts won’t be paid. 

All debts that are submitted to the estate are paid in an order that’s set by state law. Certain secured debts may be returned to the creditor in lieu of the estate having to pay off the associated debt.

How should loved ones handle collection attempts?

The decedent’s loved ones may be contacted to collect on those debts. They shouldn’t provide any personal or financial information to the collection agent unless that person is a co-signer or joint account holder. Instead, they should only provide the creditor with the contact information for the estate administrator. 

The estate administration process must be handled per applicable estate laws. This can be challenging, particularly if the estate is complex or large. Working with someone familiar with these matters may be beneficial since it enhances the likelihood of complete compliance with those laws.