A person’s debts survive after them
In today’s world, most people are in debt.
The necessities of life translate into everyday debts such as a mortgage on his house or a car loan. Credit cards are becoming an integral part of the shopping experience, creating revolving or sometimes even lasting debt. Loans from financial institutions as well as from family and friends are not uncommon. And the desire for the luxury of life often results in spending beyond one’s means. Debt is hard to avoid, and most liability does not go away when someone dies.
A requirement of notice of probate proceedings and the right to file a claim against the deceased’s estate sent to the deceased’s creditors is an integral part of the probate process or the administration of the trust. A personal representative appointed by the court or the trustee of the trust is responsible for mailing the notice to all known creditors and publishing the notice in the newspaper to notify unknown creditors. Both the format of the notice and the publication rules are strictly prescribed by law and must be observed. Once the notice has been duly given, the personal representative or the trustee must file proof with the court.
Once the notice is given, creditors have a specific period of time to file their claim with the court. If the creditor does not respect the deadline, the claim will be barred. In addition, the request must meet legal requirements to be valid. Sometimes, if there are errors in the claim, the court may allow the creditor to modify it.
Not all complaints filed can be accepted. Once the deadline for filing complaints has elapsed, the personal representative or trustee must examine the validity of each complaint and accept or reject it and inform the claimant and the court. If a claim is rejected, the creditor can either file a complaint with the court or ask the court to review the decision. The process and timeframe for filing the complaint, reviewing it and accepting or rejecting it is very specific and should be followed.
Among the accepted claims, some take priority over others, such as administration costs or funeral costs and costs for a last illness. The compensation claim from the personal representative or trustee should also be reviewed and paid. If the estate does not have sufficient funds, payment of creditors’ claims may be prorated, or some claims may even be unpaid.
There is a type of debt that dies with the debtor. If the primary borrower dies, federal student loans do not fall under the deceased’s estate. Instead, they are fully forgiven upon presentation of proof of death to the student loan management company. However, if the co-signer dies, the primary borrower remains responsible for the loans. On the other hand, the law does not oblige private lenders to cancel private loans on the death of the borrower. If the borrower dies, the private loan company will charge the debt to the borrower’s estate and once the estate is settled, the co-signer becomes responsible for paying off any remaining debt.
Although the debts of the deceased do not disappear when a person dies, these debts are usually paid from the estate of the deceased. The personal representative, trustee or even family members are usually not personally liable for these debts. However, certain actions of the personal representative or the trustee, even involuntary, may result in personal liability for the debts of the estate. Therefore, claims from creditors during the probate process or the administration of the trust must be meticulously handled.
Natalia Vander Laan is a lawyer and owner of the Vander Laan law firm in Minden