On September 30, 2015

This is an estate planning question that comes up a lot, particularly when people are intent on making sure their loved ones – and not creditors – get certain assets after they pass away. The short of it is that some debts will survive death and others won’t. In other words, survivors of a decedent can be on the hook for the repayment of certain debts, depending on the nature of the debt and the estate plan in place.

We’ll delve deeper into this answer below.

How & When Debt Survives Death

An experienced Denver estate & probate attorney discusses how and when debts survive death, meaning that surviving loved ones would be responsible for repayment.

An experienced Denver estate & probate attorney discusses how and when debts survive death, meaning that surviving loved ones would be responsible for repayment.

In theory, all debt survives death, as creditors who are owed money by a decedent can go after that person’s estate for collection. Depending on how the estate plan was set up, however, there may or may not be anything from which creditors can collect.

So, for instance, if someone set up an estate plan with various trusts and the majority of that person’s assets were used to fund the trusts, there may be very little left for creditors to try to go after.

If, however, the following situations arise, there will still be options for creditors to pursue the monies owed to them:

  • The debt is associated with a joint line of credit, and one party on the account is still alive – So, if a husband passes away, the surviving wife will still be on the hook for repaying the debt on joint lines of credit. She (and other surviving beneficiaries), however, will not be responsible for repaying unsecured credit lines only opened in the decedent’s name.
  • The debt is a secured debt – Secured debts like mortgages can leave beneficiaries on the hook for repayment or face losing the asset. This is a big consideration for people developing an estate plan, particularly if they do not want to burden certain beneficiaries with additional debt obligations.

A Word about Creditors’ Debt Claims

It’s important to note that death can bring legitimate – and non-legit – creditors out of the woodworks. In fact, even legitimate creditors may not have valid debt claims if the debt is old enough. So, the point here is that it’s important for personal representatives to carefully review each debt claim made against an estate before anything is paid out.

Denver Estate & Probate Attorney at JR Phillips & Associates, PC

For experienced help developing an estate plan or getting through probate in Colorado, contact a seasoned Denver estate & probate attorney at JR Phillips & Associates, PC. We provide a thoughtful, comprehensive approach to our clients’ estate planning, elder law and other legal needs, and we take pride in helping each of our clients and their families find the best solutions for them.

To discuss your best estate planning and/or probate options, let’s meet for an initial consultation. Schedule this meeting by calling us at (303) 741-2400 or emailing us using the contact form at the top of this page.

From our offices in Denver, we serve clients throughout the southwest and southeast Metro Area, including (but not limited to) people in Highlands Ranch, Littleton, Castle Rock, Parker, Aurora, Greenwood Village and Englewood.

Categories: Creditors and Probate, Probate