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Who is supposed to pay an estate’s debts?

On Behalf of | Oct 6, 2022 | Estate Planning |

When most people pass away, they have some level of debt that is still outstanding. It could be something major like a mortgage or a business loan or car loan. It could also be a minor type of debt, such as a credit card payment. Additionally, the estate will probably owe things like property taxes or income taxes. These are just a few examples.

It’s natural for the estate to still have those debts when the person passes away, because they simply can’t plan for everything in advance. They can’t predict exactly when those debts will have to have been paid by, and that means that their estate has to handle it after the fact. So who is the person who has been tasked with paying off these debts?

The estate administrator

Estate administrators are sometimes called estate executors, but the job is the same regardless of the title. Someone needs to administer the estate, using the will and the estate plan as a guideline, after the other person passes away. The individual who was chosen as the estate executor is the one who gets this job, and they pass out copies of the will, take inventory of assets, distribute those assets in accordance with the will and much more.

Just one of the jobs that this person has to do is to pay back the debt. It’s not their personal responsibility. But they use the assets from the estate to pay off what is still owed to the creditors. As such, this is the person that creditors need to be in touch with when trying to seek the money that they are still owed.

There is the chance that the estate will not contain as many assets as needed to pay off the entire debt. But the estate executor does have to take care of much of the debt before they can distribute any assets to the beneficiaries.

If you’re involved in this process and it’s become complicated, just take the time to look into the legal steps you need to take to secure the money you are owed.