Who Is Responsible for Paying Creditors After a Person Dies?

It isn’t uncommon for a person to die before paying off a mortgage, auto loan or other type of debt balance. In most cases, that person’s estate is held responsible for paying creditors assuming that there is money available to do so. Friends, family members and other parties are not responsible for paying off a person’s debts unless their names were on a loan document as well.

Guidelines for Paying Creditors After a Person Dies

If an estate is subject to going through probate, creditors are generally allowed to make claims at any point while a case is open. Secured creditors are generally given priority over unsecured creditors as they have an interest in an underlying asset such as a home or car. However, if there is no money available to pay unsecured creditors, an estate is under no obligation to do so.

Debts Are Paid Before Assets Are Distributed

Debt balances, legal fees and other costs are taken out of an estate before assets held in an estate are distributed to beneficiaries. Those who wish to ensure that a friend or loved one gets their full inheritance may want to create a trust or make use of beneficiary designations. Doing so will hold assets outside of an estate, which means that they aren’t subject to probate.

An Attorney Can Help You Navigate Probate

A probate attorney in Las Vegas may be able to represent you or your family’s interests until a loved one’s estate has been settled. He or she may be able to work with creditors or other parties to ensure that their claims are settled in a proper manner. In many cases, executors can shield themselves against personal liability by relying on the advice of legal counsel.