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What if My Relative Had More Debt Than Their Estate is Worth?

Posted on in Estate Planning and Probate

Texas probate attorneyIf you are going through probate, you likely already know that one important step in the process is notifying the decedent’s creditors. Settling debts is an uncomfortable, but necessary part of the process of settling an estate through probate. During this step, the executor or personal representative will need to identify anyone the decedent owed money to and let them know that their estate is in probate now. Certain assets that are part of the estate may be liquidated in order to satisfy the decedent’s debts. However, other assets are exempt from liquidation. So, what happens if your loved one owed more than their estate is actually worth? It depends on a few factors. If you believe that your loved one’s estate is going to have this problem, an attorney can help protect you. 

Which Assets Are Protected From the Liquidation Requirement?

If your relative had a lot of debt, you might be worried that you will lose your inheritance to their creditors. While it is true that non-exempt assets can be sold off to pay a decedent’s creditors, other assets are exempt from this requirement. 

The two major assets that are exempt from liquidation are retirement savings accounts and life insurance policies. Even if your relative had overwhelming debt, you or your relative’s other designated beneficiaries will be able to keep funds that are secured in a retirement account, like a 401(k), or proceeds from a life insurance policy. 

Will I Have to Pay Off My Relative’s Debts?

In limited cases, you may be on the hook for certain debts. Because Texas is a community property state, a surviving spouse may need to pay off the decedent’s credit card debt. An attorney may be able to negotiate with creditors so that debt can be paid off slowly, or in some cases, cancelled out. You may also be responsible for your relative’s medical bills incurred during their end-of-life period. 

What if the Decedent’s Non-Exempt Assets Are Not Enough to Satisfy Their Debts?

For certain types of debt, if the estate’s non-exempt assets are not enough to pay the creditors and no one else is legally liable for the debt, the creditors may be out of luck. You will need to work closely with a probate attorney if you suspect that this might be the case. Creditors may harass you demanding payment. 

Call a Bexar County Probate Lawyer

If you are facing probate challenges, Geoff Mayfield, Attorney at Law can help. Our experienced Bexar County probate attorneys will strive to protect you from being saddled with debt that is not rightfully yours. Call 210-535-0870 for a free consultation. 



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