It is difficult not to have some type of debt. From credit cards to house payments and car loans, most of us have some type of debt, and many of us will die owing debt. How that debt is handled depends on several factors. However, in few cases will you be responsible for paying your parent’s debts.
Paying the Debts of a Loved One if an Estate is Not Opened
In some cases, your parent may not have enough assets to open a probate estate. In that case, the law does not require heirs to use their income or assets to pay the debts of their parents, siblings, or other relatives. However, there could be a few instances in which you may be liable for your parent’s debt.
For unsecured debt (i.e. credit cards, medical bills, personal loans, etc.), you are only liable for these debts if you were a co-signer on the debt. For instance, if you and your mother have a joint credit card, you are equally liable for the debt on that account even if you did not incur the charges. When you mother passes, the debt becomes your debt because you agreed to be liable by signing the credit application. If you don’t pay the debt, the credit card company has the right to sue you for the balance owed. However, if the credit card is solely in your mother’s name, you are not liable. This applies to any unsecured debt that is solely in your parent’s name. The debt “dies” with your parent.
For secured debts, it is a bit different. When a creditor holds a lien on an asset as collateral for the loan, the creditor has the right to seize the asset if the debt is not paid. For example, if a bank holds the title to your parent’s vehicle, the bank can repossess the vehicle if the debt is not paid. Therefore, if you don’t pay the debt, you will lose the vehicle. Likewise, if you are a co-signer for any secured debt, the creditor could also file a lawsuit against you if you don’t pay the debt and the proceeds from the liquidation of the collateral are not sufficient to pay the debt in full.
Debts Paid Through a Probate Estate
Creditors are required to file claims against the estate. The deadlines for filing claims are outlined in MCL 700.3803. In addition, the personal representative for the probate estate has a duty to identify debts of the decedent and notify creditors. Valid claims must be paid from the assets of the estate before distributions to heirs. However, some debts are given priority over other debts, such as administrative costs, medical bills, and burial expenses.
Therefore, you should not rush to pay any debts when you first open the probate estate. You need to have all information regarding the debts owed before you begin making any payments. Otherwise, you could face a situation in which you are out of funds to pay priority debts because you paid non-priority debts early in the process.
Call a Michigan Probate Attorney for Help
The probate process can be complicated. Hiring an experienced Michigan probate attorney to assist in probating your parent’s estate can relieve some of your stress and anxiety. You are going through the grieving process and trying to adjust to losing your parent. You don’t need the added frustration and aggravation of dealing with creditors and court requirements.
The probate attorneys of The Elder Care Firm of Christopher J. Berry, CELA can help. We will provide the guidance, support, and legal counsel you need to ensure your parent’s estate is handled in a timely and cost-effective manner. Our attorneys want to help you protect the assets owned by your parent at his or her death while satisfying your commitments regarding payment of estate debts.
Contact our office by calling 888-390-4360 or use our online contact form to request more information or schedule an appointment with our Michigan estate planning lawyer.