When an elderly family member passes away, you may find that you are listed as a beneficiary in their will. This means that you’re going to inherit some of the assets that they have left behind. Beneficiaries are often heirs, but they don’t have to be. You can be a beneficiary if you’re not even related to the individual, as long as you are named in their will.
But, as you likely know, most people also have some amount of debt at all times, including at the time of their death. They may owe money on credit cards. They may have student loans. They may still be paying off a mortgage or making car payments. They may simply owe taxes at the end of the year, or they may have to pay for their utilities. Even someone who is generally financially responsible is likely going to pass away with some debt.
If they do, who has to pay that debt off? Is this an obligation for heirs and beneficiaries to sort out?
The estate executor
The good news for you is that you probably don’t have to worry about the deceased’s debts. This is something that has to be addressed by the estate executor (or estate administrator). They will use the money from the estate to pay off the debts, and they will then distribute any remaining money in accordance with the testator’s will. By the time you get your inheritance, those debts will already have been paid.
What if you are the estate executor? In that situation, you won’t need to worry about personally paying off a debt unless you are a cosigner. Instead, you just have to use money from the estate to cover the debt before distributing remaining assets, so the important part is simply to do things in the proper order.
Researching your legal obligations
If you are the estate executor, it’s important to know what legal obligation you have to the estate and to the estate’s beneficiaries. Even if you’re not the executor, you do want to understand how the probate process goes and what you should expect to inherit. Make sure you know about all the legal options that are available in case the estate executor compromises the value of the estate or you need assistance with executing any administration duties you’ve been tasked with.