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How personal debts can complicate the succession process

On Behalf of | May 31, 2023 | Succession/Probate

The succession process in Louisiana is often very lengthy. It can take months in most cases, and sometimes beneficiaries must wait more than a year before they can receive their inheritance. People tasked with overseeing the succession process have to file paperwork with the Louisiana courts, send notice out to parties with an interest in the estate and follow the appropriate timeline for settling succession matters.

One of the most important responsibilities of the party managing estate administration and succession court proceedings on behalf of a Louisiana decedent is the responsibility to handle that person’s financial obligations. Assets aren’t the only personal property that transfers to the estate when someone dies. Debts ranging from the Medicaid benefits someone received to the remaining balances on their credit cards when they died can take priority over the rights of beneficiaries during succession.

What debts does the estate need to repay?

In many cases, every legitimate debt owed by someone who dies will become the responsibility of their estate. Someone’s financial obligations can diminish how much they pass to the next generation after they die and can increase how long it takes for their beneficiaries to receive property from the estate. The personal representative of the estate will typically need to send notice to every creditor that they are aware of based on the testator’s financial records and estate planning documents. They will also need to publish notice about the succession proceedings so that unknown creditors can make a claim in court.

The obligation to repay those debts supersedes the right of family members to inherit property from the estate. It may be necessary to liquidate some of the most valuable holdings in order to repay debts instead of transferring those assets to specific beneficiaries. The process of estate administration may need to wait temporarily for the representative to notify creditors and give them an opportunity to make claims in succession court.

Small mistakes in this process can be devastating for the person tasked with managing succession proceedings, as they could sometimes end up personally responsible for the debts that they do not resolve if they unintentionally mismanage estate resources. Seeking legal guidance to learn more about the challenges that may arise during succession court might help protect those who have been tasked with handling someone’s estate.