No matter how much you’re able to leave your loved ones and other beneficiaries when you die, you’ll likely leave behind some debt. It could be as small as some small pending credit card bills or as extensive as a mortgage or other loans with considerable balances. Further, if you were dealing with a serious illness or injury prior to your death, the medical bills left behind can be significant.
Ohio law details the debts that an executor is required to pay before disbursing assets. In addition to any final medical bills, these include funeral expenses, your final property taxes that may be due, any nursing home expenses that are owed and the costs of handling your estate.
Is your family responsible for any debt your estate doesn’t cover?
In many cases, the value of the estate far exceeds any debts that are owed. However, what if it doesn’t? Often, the creditors just have to write off the unpaid debts. They typically cannot attempt to collect from relatives on a debt after the debtor has died. There are some exceptions, however.
If a debt was in more than one name – for example, a loan taken out by spouses – the surviving spouse likely still is responsible for replaying the debt. Further, if someone co-signed a loan or credit card with the deceased person, they’ll likely be responsible for the debt.
When a person is developing their estate plan, it’s helpful to detail any significant loans and other debts they have and keeping that information current. Making this information available to the executor can be extremely helpful. It may not hurt to remind people if they’ve co-signed loans with you so that they can be prepared to take over the payments if necessary.
If you’re an executor administering an estate, having experienced legal guidance can help you ensure that you take care of all outstanding debts before you disburse any funds.