Who Pays the Debts of the Deceased?

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• So Who Is Responsible for the Debt When You Die?
• Federal Law Prohibits Debt Collection Harassment

Losing a loved one is always painful. In addition to dealing with the personal grief and family trauma, there are also a number of legal issues that need to be sorted out during the probate of the deceased person’s estate.

“Decedents often die with debts such as final medical expenses, credit card balances, and mortgages outstanding,” says Georgine M. Kryda, an estate planning attorney in Golden. “There’s also the liability for their final year federal and state income taxes.

One question that people often ask in such situations is, “Who is responsible for paying the deceased person’s debts?”

As a general rule, family members are not responsible under Colorado state law for a relative’s debts. That main exception to this rule is for debts where spouse or another relative may have been a co-signer on the obligation itself. For example, if you co-signed your adult daughter’s car loan and she dies before paying off the debt, the lender can come after you for the unpaid balance.

Some states do have what are known as “filial responsibility” laws. These statutes require adult children to provide financial support for elderly and impoverished parents. In some situations, a health care provider or nursing home may seek to collect any unpaid medical bills or other bills from the children after the parent dies. Colorado does not have such a law on the books, however, and even the states that do rarely enforce such provisions.

So Who Is Responsible for the Debt When You Die?

Even though a creditor cannot normally go after a family member for an unpaid debt, it can pursue a claim against the deceased individual’s estate. Debts usually do not die with the debtor.

“Colorado has a one-year statute of limitations from the decedent’s date of death for creditors to present their claims,” notes Kryda.

“It can be tempting for a personal representative—or whoever has control over the decedent’s property—to pay small claims, but the law prohibits favoring one creditor over another,” she continues. “If an estate is insolvent, or likely to be insolvent, one needs a comprehensive plan to address claims against the decedent and the decedent’s estate. A personal representative, or whoever is controlling the decedent’s property if a probate has not been opened, may be held personally liable for making premature distributions from an estate.”

While relatives are not personally liable for the debts of the deceased, their inheritance may be reduced—and in some cases eliminated altogether—if those estate assets must be liquidated to pay off creditors. Keep in mind, however, that creditors typically cannot touch non-probate assets, such as retirement accounts with a designated beneficiary or property transferred into an irrevocable trust. In addition, if you inherit a house from a relative and there is still a mortgage, you may need to make arrangements to keep those loan payments current if you wish to retain the property.

Federal Law Prohibits Debt Collection Harassment

The Fair Debt Collection Practices Act (FDCPA) is a federal law that protects individuals from harassment by debt collectors. Among other things, the FDCPA states a creditor may only discuss a deceased individual’s debts with their spouse, parent (if the deceased was a minor), legal guardian, or the executor of their estate. A debt collector may not contact any other relative for purposes of seeking payment.

However, it is permissible for the debt collector to contact a third party, including a relative, in order to obtain contact information for the executor or someone else who is authorized to pay the deceased individual’s debts. But even in these situations, the debt collector may only call the third party one time and it may not discuss the actual debt. If you have any further questions about how debt collection and creditor claims work after a person dies, you should speak with a qualified Colorado probate attorney right away.

For more information on this area of law, see our overviews of estate planning, wills, trusts, and probate and estate administration.