What Happens in Probate Court If An Estate is Broke?

After the estate of a deceased loved one goes to probate court, one of the responsibilities of the executor will be to pay off the debts of the estate before dividing the remaining assets among those listed in the Will.  However, in some circumstances, the deceased person dies owing more in debts than they have in assets to pay the debts.

Do Heirs Pay the Deceased Debts?

One of the most frequent questions we get is whether the Deceased person’s heirs are liable for the Decedent’s debts after death.  The short answer:  NO.  Beneficiaries of the estate are never on the hook for the debts of the deceased if their estate cannot cover it. However, this does not extend to spouses or other who may have signed documents agreeing to be liable for the Decedent’s debts while he or she was alive.  For instance, if a sibling of the Decedent co-signed on a car note for the Deceased, then both the Deceased’s estate and the sibling would be liable for the debt.

How Creditors Fight Back

It is natural to assume that any creditors that were owed by your loved one’s estate are not going to pleased that their debts were not satisfied. However, there is typically very little they can do about it. The only way that a creditor can fight back is to file a claim in the probate court seeking to be repaid for their debt.  If some of the creditors do not pursue their debts correctly out of the estate, then their debts may be barred and not paid from the estate.  In that instance, those creditors who properly filed their claims will receive a larger portion of the estate than they might have otherwise.

If this situation arises after the probate process, it is crucial to contact your attorney as soon as possible to prepare a case in order to fight back.