Making payments toward your outstanding debts is not something you will have to worry about when you, most unfortunately, pass away. However, you must understand that these debts cannot be simply wiped away at the time of your death. That is, someone must pick up this responsibility on your behalf. This is to say that you must do some deep reflection on your financial obligations and what you are asking someone to tackle when you are no longer around to handle it yourself. With all this being considered, please follow along to find out how your outstanding debts are supposed to be paid off when you die and how a proficient New York City estate administration attorney at Zimmet Law Group, P.C. can help you understand your duties for right now.
How are my outstanding debts paid off when I die?
Hopefully, before your untimely passing, you established a comprehensive estate plan for yourself. Within this estate plan, specifically in your Last Will and Testament document, you may have appointed a trusted individual to be the executor of your estate. Now, your executor may be charged with many responsibilities, including the paying off of your outstanding debts. This may be accomplished through the following steps:
- Your executor may offer your will for probate (i.e., present it to the New York State Surrogate’s Court).
- Your executor may collect and preserve the remaining money and property you left behind in your estate.
- Your executor may take this money and property to pay off your estate taxes and outstanding debts.
- Your executor may distribute the assets left over from the taxes and debts amongst your beneficiaries.
- Your executor may provide an accounting of their actions with the Surrogate’s Court.
- If in agreeance with all their actions, the Surrogate’s Court may close your estate.
Which debts are my executor responsible for paying off?
When it comes to paying off your outstanding creditors with your remaining money and property, your executor may only have to do so for your personal debts. The most common examples of such debt include credit card debts, medical bills, utility bills, payday loans, tax debts, and of course, personal loans.
Student loan debts may be unique to this. That is, your federal student loans may be forgiven upon your unfortunate passing, which may include your Parent PLUS Loans. However, your private student loans may not receive the same forgiveness. Instead, your executor may have to use your estate to pay the remaining balance.
Your executor may not be responsible for handling your joint debts, either. Namely, you may also have credit card debts and personal loans that you have taken on with one or more other people. With joint debts such as these, the surviving borrowers may have to carry the burden of paying them off when you are no longer around to help contribute yourself.
As someone crafting an estate plan while experiencing debt, there is nobody better you can turn to than a talented New York City estate planning attorney from our firm. So please, call us at Zimmet Law Group, P.C. as soon as possible.
