Debt does not transfer to another person, even after your death. But your estate will take on your debts. Because the assets in your estate belong to you, creditors can go after them to recoup their money.
Your personal representative must notify creditors of the probate process and your death to give them a chance to file a claim with the probate court. The personal representative may also file a list of debts he or she will pay or has paid, which can take the place of a creditor’s filing.
The personal representative must pay all valid claims and has one year from the original notice to creditors. But there is a five-month period the representative can wait before beginning to make payments.
The personal representative will have to take any objections. He or she will have to file the objection with the court for consideration.
Paying debts must occur in an order laid out by law to ensure high-priority debts come first. The highest priority debt is estate administration costs followed by funeral and burial expenses up to $6,000. Next are taxes and court-related debts and then medical debts. If there is money remaining, the family can get an allowance. After this comes past-due child support and business debts. Any remaining debts come last.
The personal representative plays a large role in ensuring that the estate handles any debts. But the court will oversee the process and ensure it follows the law. Remember, though, your family will not be responsible for paying your debts, even if your estate is not large enough to pay them all.