When a loved one passes away, settling his estate can be a priority for surviving family members. While distributing the assets left behind can be a big focus in the estate settlement process, however, another important element may be resolving any debt issues.
Revealing just how debt is handled after a debt, the following presents some of the most important facts to understand about debt in estate settlement process. While the following information provides some crucial insights, however, don’t hesitate to contact our Pueblo lawyers when you need specific answers about how to proceed with settling an estate in Colorado.
The Facts about Debt after Death
- A surviving loved one can be on the hook for repaying debts associated with joint lines of credit – For instance, if one spouse passes away, the surviving spouse will still be obligated to repay any debts associated with joint credit cards or any other joint line of credit. Similarly, if the surviving loved one was the co-signer of a loan taken out by the decedent, then, again, that survivor will be legally obligated to repay the outstanding debt.If, however, the surviving loved one was only an “authorized” signor or an “additional cardholder” on an account that was solely opened and held by the decedent, the survivor will not be personally obligated to repay any outstanding debt(s) associated with that account.
- Other debts left behind by a decedent can be collected from the estate – In other words, any creditors that have outstanding debt claims against the decedent can seek repayment from the decedent’s estate. This is one of the reasons that the probate process involves a “notification to creditors” to inform them of the death and provide them with an opportunity to seek repayment from the estate. There are strict windows of time for creditors to make these claims, and missing this timeframe can result in creditors’ forfeiting their right to collect on an outstanding debt later.
- The estate’s debts will have to be settled before the assets can be distributed – This is critical for the personal representatives and/or executors of estates to understand, as all creditors with legitimate debt claims must be repaid before the assets of the estate are distributed. Here, it’s also important to point out that other liabilities (like estate taxes, for instance) have to be satisfied before the asset distribution phase as well.
- Not all creditors attempting to collect from an estate will have valid claims – In fact, when death occurs, it’s not uncommon for scam artists to come out of the woodworks attempting to collect on fake or outdated debt claims. So, the real bottom line here is that it’s crucial to carefully examine every debt claim made against an estate before these claims are paid. While that can ensure that an estate’s assets are misappropriated to fraudulent claims, it’s also essential in preventing personal representatives to be confronted with breach of fiduciary claims.
- An attorney’s experienced oversight can be crucial when resolving debt issues for an estate – When an estate has complicated debt issues and/or asset holdings, working with an experienced lawyer to settle the estate and get through probate can be critical to avoid costly mistakes and resolving the case as favorably and efficiently as possible.
Contact the Pueblo Lawyers at Gradisar, Trechter, Ripperger & Roth
For the highest quality services and representation for estate planning and probate in Colorado, contact the experienced Pueblo lawyers at Gradisar, Trechter, Ripperger & Roth by calling (719) 556- 8844 or by emailing us using the contact form on this page.
From our offices based in Pueblo, we represent clients in Trinidad, La Jara, Lamar, Walsenburg, Alamosa and throughout the state of Colorado.