HOUSTON LAWYERS DIRECT

This is a common question; most of the time people may misunderstand how debts are paid, and who is responsible when a loved one dies. A relationship to a deceased person does not necessarily obligate you to pay their bills. When a person dies, with a will, their assets will enter probate. A Houston estate attorney will file the probate, a liquidation of assets will take place, and the court will order a distribution of monies to pay off debts owed to creditors.

Assets include property of the decedent, such as real estate, automobiles, cash, stocks, bonds, bank accounts and personal property such as antiques, collectibles and in some cases, household furnishings. Assets excluded from probate can include jointly owned property with rights of survivorship, life insurance benefits that have a named beneficiary and transfer or payable on death (TOD, POD) financial instruments.

Assets commonly owned by you and your spouse which no title or proof exists of specific ownership (household furnishings, cash, etc) are also not included in probate. Because you lived with your spouse, the law views these assets as joint ownership with rights of survivorship. The excluded assets will not be inventoried or subject to pay the debts of the deceased.

Once the Court accepts the assets and debts of the decedent, the court will require a distribution, executed by your Houston estate attorney. In the distribution all the debts, attorney fees and court costs are paid, and any remaining amount will go to the surviving heirs. In the event that there is not enough money to pay off all the debts, the estate is insolvent. An insolvent estate is not responsible to pay off the debts and a creditor can not compel an heir to pay those debts.

In the case of assets being jointly owned as in the case of real estate, if the property is not deeded as “joint tenants with right of survivorship”, the property may be subject to creditor’s claims, but only the one-half interest that is not owned by you.

Below are some situations where you may or may not be responsible for debts of a deceased spouse or parent:

• If you co-signed a loan for your parent or spouse, in case of their death, you may be responsible for the debt.
• If you guaranteed or agreed (usually in writing) to pay debts of your parent or spouse, you would be responsible for their debts. (Although this is not the case if you are merely a power-of-attorney for them, as you are acting on their behalf and not on your own.)
• If you own credit cards in both your names and you have both signed the credit application, you may be responsible for the balance. (if you have a card with your name on it but did not sign the application, you are not responsible for the amount owed)

It is important to remember that creditors can only make a claim against a person’s estate, and can not compel you to pay, if the estate does not have enough assets to cover the debt. It is wise to discuss your particular case with a Houston estate attorney, as an experienced estate attorney can help you find ways to minimize your potential liability.

Related posts:

1. Do I still owe debt if the person I owe it to dies?
2. Houston Wills, Trusts, and Estate Planning: Understand the Basics
3. What happens if I die without a will?
4. What is elder care law, and why is it important?
5. What is probate and how can I avoid it?

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Tags: debt, family law, houston-lawyers, wills

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  John Crow 1 year ago 1 point

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  Thank you for this very informative article.
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