By Matthew D. Hawkins
Are you worried about the financial implications of the death of a parent or other family member? Have you received a call from a creditor asking what arrangements you will make to pay their debts, or have you received a large bill in the mail from a hospital or rehabilitation facility? Are you personally responsible for paying these debts just because you are related?
With a few exceptions, the answer is no. In Virginia, you are not liable for your deceased relative’s personal debt – the debts are paid from her estate.
There are exceptions to the rule. You may be responsible for the debt if 1) you co-signed for a loan or line of credit issued to the deceased person, 2) you are the deceased person’s spouse and Virginia law requires you to pay a particular type of debt (for example, fees charged for emergency services provided by hospitals), or 3) you are the personal representative of the estate and did not comply with state probate laws directing payments to creditors.
Regardless of whether you may be personally responsible, the estate is primarily obligated to pay the debts of the decedent. If there are enough assets to pay all the debts, then the creditors are paid and the beneficiaries inherit the rest of the estate. If the debts of the deceased person exceed her assets, then paying creditors takes priority over the estate beneficiaries, and there may be nothing left for the beneficiaries to inherit. If the executor or administrator fails to follow state laws governing the payment of creditors, then she can be personally liable for the debts of the decedent.
The death of a loved one is a painful experience, and dealing with complex probate and creditor payment rules, makes the experience that much more difficult. If your loved one has recently passed, or you have recently qualified as an executor or administrator of an estate, please call us. You should immediately speak with one of our experienced estate administration attorneys to ensure you do not become personally responsible for paying the debts of the estate.