When a loved one passes away, the surviving family members are thrust into the confusing and unfamiliar task of administering the individual’s estate. If the individual was in debt when they died, creditors sometimes try to pressure the family to pay. But is the family liable for the debt? It depends. If a relative co-signed on a loan or a credit card, they are still liable for the balance. But generally family members are not obligated to pay if the individual was the only person associated with the debt.
With that said, that does not stop some creditors from trying to convince the family to pay. This is one of the reasons you should contact a probate attorney as soon as possible after the death of a loved one. In North Carolina, the probate process ensures debts are satisfied and assets are distributed according to the decedent’s will.
Although surviving family members might not be responsible for a debt of a deceased loved one, their inheritances can be indirectly affected by debt. Creditors are permitted go after the estate’s assets and Executors are required to settle valid debts before distributing inheritances. In some cases it causes the estate to become insolvent, which occurs when the estate assets do not cover the debts remaining when the individual passed away.
But it is not too late for you to prevent this from happening to your family. You can avoid these problems by meeting with a North Carolina estate planning attorney to discuss how to best structure assets to minimize the impact of any debt on your family members after your death. There are simple steps you can take now to manage debt and preserve assets for your family.
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