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How personal debts can affect the probate process

On Behalf of | Feb 4, 2025 | Probate

There are numerous complications that can arise during probate proceedings. In some cases, surprise heirs may show up, claiming to be family members of the decedent. Other times, there may be disputes about alleged promises made by the decedent regarding certain assets prior to their passing.

Occasionally, there may be financial complications that affect what beneficiaries inherit from the estate. Personal debts can have a significant negative impact on the legacy planned by the decedent. Surviving family members expecting to inherit from an estate and those serving as personal representatives generally need to understand how debts affect probate proceedings.

Debts become the responsibility of the estate

Any assets that belong solely to an individual are likely to become part of their estate after they die. Unless people plan carefully by taking on co-owners or otherwise acting ahead of time to keep assets out of probate court, whatever they own may have to pass through probate court after they die.

Any financial obligations owed by the decedent also become the responsibility of their estate. Typically, the personal representative needs to go over incoming correspondence and financial statements to identify known creditors. They must then communicate with those creditors about pending estate administration and publish notice for unknown creditors.

Those creditors have an opportunity to make a claim in probate court. Their right to repayments is typically more important than the right of inheritance. In some cases, personal representatives may need to liquidate most or all of the property in an estate to repay credit card balances, medical debts, student loans and other financial obligations.

If they fail to take the right steps to address financial obligations, creditors could try to hold them personally responsible. Those who accept the responsibility of administering an estate generally need help following the right steps to fulfill their responsibilities and avoid personal liability.

Beneficiaries hoping to inherit from an estate often need to review statements from the personal representative carefully. In scenarios where there are major outstanding debts, fulfilling those financial obligations might result in the estate having fewer resources to distribute to heirs and beneficiaries.

Understanding what to expect during the probate process can limit the likelihood of disappointment and unnecessary conflict. It can be helpful for those with an interest in an estate to understand how debts can affect probate proceedings so that they know what to expect during the probate process.