What Happens When Debts Exceed an Estate?

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In the probate process, creditors have the legal right to assert claims against the estate. Creditors that file valid claims must be paid through the assets of the estate, which may be sold to raise the money to satisfy debts. Families often ask if they will be personally responsible for the debts of the deceased if they exceed the assets.

Creditors have the first right to be paid back before beneficiaries can receive assets. It is the personal representative’s responsibility to address creditor claims and satisfy them based on priority as outlined in the South Carolina Probate Code. If a personal representative distributes assets to heirs or beneficiaries before satisfying creditor claims, the personal representative could be personally responsible for the debt. Hiring a probate attorney to navigate creditor claims would be beneficial to the personal representative and the heirs.

In the probate process, creditors have the legal right to assert claims against the estate. Creditors that file valid claims must be paid through the assets of the estate, which may be sold to raise the money to satisfy debts. Families often ask if they will be personally responsible for the debts of the deceased if they exceed the assets.

You can engage in estate planning, even when you have significant debts. You may consider a life insurance policy to pay off debts after you pass, so your family can still receive an inheritance on which they may be counting. Take the time to address your estate planning now so that you and your family have peace of mind about the future.

South Carolina Estate Planning Lawyers

Regardless of your financial situation, your family can benefit from the help of an estate planning attorney. Call Parker Law at (803) 784-4203 or contact us online to learn how we can assist you.

FAQ

Can I handle my estate plan on my own?

While you are legally able to, it is not a good idea because you may make mistakes. An estate planning attorney is better versed in what the law requires and can give you peace of mind in knowing your estate plan was done correctly.

How do creditors know that a loved one has died?

You are required to publish a notice to creditors as part of the probate process.

Is the probate process difficult?

The probate process can be very complex if the deceased carried a lot of debt prior to their passing.

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