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Estate administration issues: Who pays the decedent's debts?

Losing a parent is bad enough, but realizing that wrapping up his or her financial affairs involves numbers and paperwork can make the situation that much more difficult. One of the estate administration duties that adult children here in Illinois and across the country must deal with is the debts that a parent left behind. With the economy the way it has been in recent decades, many parents of adult children pass away with debts, and creditors may be vying for payment -- from any source they can.

The primary source of payment for a decedent's debts is the estate. However, there may not be enough funds and other assets to cover the amounts owed. In those cases, some creditors will turn to surviving relatives for payment. Where a spouse may end up responsible for a deceased spouse's debts, other relatives ordinarily do not have that same obligation.

For instance, if an adult child is the beneficiary of an account through a beneficiary designation or a pay-on-death account, those funds do not have to be used to pay the decedent's debts. That does not stop some creditors from attempting to convince surviving family members to pay the money owed. It is important to know that except under certain circumstances, those individuals are not obligated to pay the debts of a deceased loved one.

In order to know for sure whether someone other than the estate must pay a debt, it would be a good idea to consult with an Illinois estate administration attorney. A thorough review of each debt in question could help ascertain whether a creditor's claims that a surviving family member owes the remaining balance. In most cases, those claims turn out to be erroneous, but any gray area may require further assistance.

Source: nerdwallet.com, "When Your Parents Die Broke", Liz Weston, March 8, 2018

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