In many cases, an individual passes away with a certain level of outstanding debt. For example, they may need to pay income taxes or property taxes. They still have a mortgage or a car loan. Even people who don’t have major types of debt will likely still have at least a small amount of revolving debt on a credit card.
During the probate process, as assets are divided, heirs may be concerned that they are going to be responsible for these debts. After all, their parents’ assets are being given to them and they are legally taking over ownership. Does that mean they also have to take over the debts and pay them off?
The role of the estate administrator
First and foremost, it’s worth noting that the estate administrator is the one who has to deal with these debts. The debts are not given to the heirs. Instead, the administrator uses the funds that are left in the estate to pay off as much of the debt as they can. Ideally, this will completely eliminate it, and then remaining assets can be given to the heirs.
But even if there is debt remaining, those heirs do not have to pay it. Likewise, the estate administrator does not have to personally cover any of these costs. They are just legally in charge of working through the process, but they don’t have to use their own money. They take control of any money the estate had remaining, so the parent is essentially handling their own debt after their passing.
This process can get complicated. All involved should know what legal steps to take.