In an estate, under what circumstances do the bills (credit cards, etc.) need to be paid? If the only estate asset is the real property, can...

Question

In an estate, under what circumstances do the bills (credit cards, etc.) need to be paid? If the only estate asset is the real property, can it have a lien put on it by creditors? Is anyone personally responsible for these bills?

Answer

If the estate is solvent, meaning there are assets with monetary value that exceed any mortgage or encumbrance against the asset, the creditors are entitled to be paid from this value, after those claims with priority over the creditors' claim are paid. Priority claims include funeral expenses, administration expenses, widow and minor child allowances, etc. If the creditor claims exceed the value of the assets, the amounts to be paid to the creditors are prorated. If there is a probate estate opened in court, creditors file their claims in this proceeding. If the creditors are not paid and there are assets, creditors can go after the beneficiaries who received the assets. It is best to attempt to settle with the creditors and get settlement agreements in writing.

Answer

I am sorry for your loss. If the home was in the decedent's name, it belongs to the estate. If any proceeds result from selling it, then the proceeds would be subject, together with other assets of the estate, to claims against the decedent's estate by any creditors of the estate.

One is not responsible for the debts of another unless there is some basis (such as being a co-signor on a loan, responsibility for a spouse's or dependent child's necessities). So, if the proceeds of the estate are exhausted, absent co-signing, wrongdoing or something unusual, there should not be any further responsibility for the debts. In most estate situations, there should not be any money required to be paid by anyone from their own funds. Care needs to be taken, however, to assure that one creditor does not benefit over another.

Working with an attorney experienced in probate and real estate, you should be able to evaluate the solvency of the estate and work toward a solution. It may be possible to negotiate a settlement of the debts.