Estate and will question

[mefordis]

Does anyone know what happens if someone dies and they owe more than the estate has? Who pays those creditors? Do they just go unpaid? What keeps those named in the will from just taking their "share" before the creditors get paid?

Thank you!

 

[Disney Doll]

Creditors get paid first. If there isn't enough to pay the total owed to creditors, it gets paid out to them proportionately.

 

[doxdogy]

If I remember correctly, when my father passed away my brother (executor) took out an ad in the paper. Basically notifying his creditors that he was deceased. This would give them a chance to make any claims against his estate. As far as his other bills that we knew about we paid them off and then we split the proceeds of his estate.

 

[mefordis]

Thank you! But what keeps someone from just selling the assets and dividing the money between those named in the will? What is in place to ensure all creditors do get paid?

 

[AKL_Megs]

If there isn't money, they don't get paid.

Unless someone else was a co-signer, or some other way connected to the debt, if the estate doesn't cover ALL of the debt, the debt just goes unpaid.

I worked with an older man once who was terminally ill, but who had absolutely no family. When he found out he was dying, he started buying all sorts of things on his credit card. He bought a new car I know he couldn't afford... he even bought a boat! He would buy us pizza lunches every week. I assume that once he died, he had little to no liquid assets. They probably sold his house and cars, and paid his debts with that.

 

[minkydog]

If there isn't money, they don't get paid.

Unless someone else was a co-signer, or some other way connected to the debt, if the estate doesn't cover ALL of the debt, the debt just goes unpaid.

I worked with an older man once who was terminally ill, but who had absolutely no family. When he found out he was dying, he started buying all sorts of things on his credit card. He bought a new car I know he couldn't afford... he even bought a boat! He would buy us pizza lunches every week. I assume that once he died, he had little to no liquid assets. They probably sold his house and cars, and paid his debts with that.

My dad did the same thing before he died. He had several maxed out credit cards, a $75,000 lien against the house, two trucks, and various other small loans. His total liquid assets when he died were $23,000. We paid off a few things and then let the chips fall where they may. A lot of creditors went unpaid. They weren't happy about it but you can't get blood out of a turnip.

 

[disneymarie]

Thank you! But what keeps someone from just selling the assets and dividing the money between those named in the will? What is in place to ensure all creditors do get paid?

There is a state will code, and duty sworn to the executor. If you search your state or contact the courthouse register of wills office they should have a copy.

There is a priority that it is paid. The executor can not just pay willy nilly. The attorney that probates the will has the executor take the oath, file the income tax forms for the worth of the estate. The ad will go in the paper for three times.

Any bills for the burial, or as the father requested be paid. In his insurance policy he may have liens on it, or directions.

If there are credit cards and no death insurance on them, the executor receiving the mail will pay them. If there is no money to pay them they will get nothing,
Unless there is a home or assests, then all creditors then heirs get theirs.,

That is why the executor gets a fee from handling the mess some estates are in.


The heirs can not be sued for the money unless they sold property and creditors go after that.

 

[mefordis]

My dad did the same thing before he died. He had several maxed out credit cards, a $75,000 lien against the house, two trucks, and various other small loans. His total liquid assets when he died were $23,000. We paid off a few things and then let the chips fall where they may. A lot of creditors went unpaid. They weren't happy about it but you can't get blood out of a turnip.

If you chose to do so, could you have taken that $23k and NOT paid the creditors, without any repercussions? I'm just wondering what enforcements are in place to make sure the creditors get paid before those named in the will divvy everything up.

 

[minkydog]

If you chose to do so, could you have taken that $23k and NOT paid the creditors, without any repercussions? I'm just wondering what enforcements are in place to make sure the creditors get paid before those named in the will divvy everything up.

Well, they could always take us to court. And several of them threatened to do so. All I could tell them is "Get in line! We'll see you in court." NONE of them took us up on it, but they certainly could have tried. We made it very clear to all the creditors that there was XXX amount of cash and XXXXXX amount of debt. Some of them got as little as $500 and they just had to suck it up.

 

[mefordis]

Well, they could always take us to court. And several of them threatened to do so. All I could tell them is "Get in line! We'll see you in court." NONE of them took us up on it, but they certainly could have tried. We made it very clear to all the creditors that there was XXX amount of cash and XXXXXX amount of debt. Some of them got as little as $500 and they just had to suck it up.

So you ended up getting no inheritance? Thank you for sharing your experience!

 

[bicker]

If beneficiaries are given, or take, proceeds from the estate, before creditors are paid, then the creditors can go after the beneficiaries.

 

[mefordis]

Thank you for all of the details!

There is a state will code, and duty sworn to the executor. If you search your state or contact the courthouse register of wills office they should have a copy.

There is a priority that it is paid. The executor can not just pay willy nilly. The attorney that probates the will has the executor take the oath, file the income tax forms for the worth of the estate. The ad will go in the paper for three times.

Any bills for the burial, or as the father requested be paid. In his insurance policy he may have liens on it, or directions.

If there are credit cards and no death insurance on them, the executor receiving the mail will pay them. If there is no money to pay them they will get nothing,
Unless there is a home or assests, then all creditors then heirs get theirs.,

That is why the executor gets a fee from handling the mess some estates are in.


The heirs can not be sued for the money unless they sold property and creditors go after that.

 

[DizBelle]

Can creditors go after life insurance benefits? Or does that go to the named beneficiaries and that's that?

 

[golfgal]

If beneficiaries are given, or take, proceeds from the estate, before creditors are paid, then the creditors can go after the beneficiaries.

Can creditors go after life insurance benefits? Or does that go to the named beneficiaries and that's that?

No, creditors can NOT go after life insurance proceeds or pretty much anything that has a "beneficiary" because those never become part of the estate-which is WHY life insurance is a good thing to have to leave to heirs and to use for paying any estate taxes. The money in life insurance policies and anything that lists a 'beneficiary" bypasses the estate.

 

[bicker]

That's really the difference between beneficiaries of the estate and beneficiaries of life insurance policies: Beneficiaries of the estate get paid last, and so if those beneficiaries are given, or take, proceeds from the estate, before creditors are paid, then the creditors can go after the beneficiaries. By contrast, life insurance gets paid directly to beneficiaries of the policy -- the money never goes to the estate, and so creditors of the estate don't get it and have no claim to it.

 

[Melrosgirl]

Going through this right now. It's been almost two years and the estate is still open. All creditors were paid and then right after the one year mark when we thought the mess was over with, the IRS contacted the attorney and said money was owed. That was news to everyone. I guess for some reason the IRS is never notified right away. I don't understand that. Social security was notified, all known creditors were notified, but the IRS isn't automatically notified (wasn't like there was a bill from IRS the entire year after death, so no one knew)? So now it's a big mess. Money owed is more than what is left in the estate now.

Corresponding with the IRS is difficult too. It takes 6 weeks each time a letter is written...just to get a response.

 

[mefordis]

If the estate doesn't have enough, you don't have to pay anything out of your pocket, do you?

Going through this right now. It's been almost two years and the estate is still open. All creditors were paid and then right after the one year mark when we thought the mess was over with, the IRS contacted the attorney and said money was owed. That was news to everyone. I guess for some reason the IRS is never notified right away. I don't understand that. Social security was notified, all known creditors were notified, but the IRS isn't automatically notified (wasn't like there was a bill from IRS the entire year after death, so no one knew)? So now it's a big mess. Money owed is more than what is left in the estate now.

Corresponding with the IRS is difficult too. It takes 6 weeks each time a letter is written...just to get a response.

 

[bicker]

If the estate doesn't have enough, you don't have to pay anything out of your pocket, do you?

If you didn't receive anything from the estate, then you aren't liable to cover the debts of the estate.