Handling succession court when your parents die is a big responsibility. They may have specifically named you in their estate planning documents as the person they wanted to settle their affairs, or you may have assumed the role through the courts.
In either scenario, it will be your responsibility to settle their affairs and distribute their property to their beneficiaries in accordance with their instructions or state law. You will have to work with the courts, which will oversee the process.
Paying someone’s debts will often be a major component of estate administration. Do you become responsible for your parent’s debts if you are the person responsible for their estate?
You could occasionally be responsible if you make mistakes
Typically, other people don’t assume responsibility for repaying a debt when the borrower dies unless they were a co-signer for the account. Otherwise, the responsibility to pay someone’s debt passes to their estate when they die.
The rights of creditors technically supersede the rights of family members and other beneficiaries. The resources in the estate should go toward the resolution of someone’s financial obligations before any beneficiaries receive property from the estate. In some cases, the executor may have to sell off all estate property to repay someone’s debts.
If someone dies in Louisiana with more debt than personal property, the executor of their estate won’t have to worry about becoming responsible for those debts. Provided that they pay them in the appropriate order of priority, once the estate runs out of assets, their obligations to pay the debt ends.
Unfortunately, people can make mistakes with estate resources that make them personally responsible for debts. Specifically, if you distribute property to beneficiaries and then don’t have enough to pay off debts, creditors could potentially bring a claim in court to hold you personally responsible. If you can’t recover the assets from the beneficiaries, you may have to pay for those debts with your own resources.
It is therefore crucial that you follow the appropriate steps to notify the creditors and to comply with all Louisiana’s succession laws related to debts before you provide any beneficiaries with their inheritance.
Understanding when you may have personal liability related to estate administration can help you protect yourself and better fulfill your responsibilities.