Rather than passing along assets to their loved ones, baby boomers who struggled financially may instead be passing along a stack of unpaid bills.
In recent years, the Federal Reserve has indicated that debt levels among senior citizens is rising. If you are serving as the personal representative for your parents, it is important to understand the impacts debt could have when administering their estate.
Who inherits the unpaid bills?
The National Bureau of Economic Research estimates that about half of seniors die owning less than $10,000 in assets. Additionally, more than a quarter die carrying credit card debt.
It is important to note that debt does not simply disappear when someone dies. Instead, ownership of the debt is transferred to the estate. It is the responsibility of the personal representative to settle those debts. The personal representative must pay these debts before distributing any remaining assets to the decedent's heirs.
If the estate does not own enough assets to pay off all the debt, that debt may disappear. Speaking with a lawyer can help you understand what impact, if any, those debts could have you and the decedent's other heirs.
What happens with a mortgage?
Credit card debt is not the only thing on the rise among seniors in Florida. It is also increasingly common for aging individuals to die while still paying off a mortgage.
If you want to keep the house, contact the bank to take over making mortgage payments. An alternative option is to sell the house, settle the mortgage and keep the remaining proceeds from the sale.
Be wary when speaking to debt collectors
Creditors will seek to collect unpaid debts against the estate. They may engage in intimidating behavior and will use several different tactics to try to collect as much as possible from you.
It is important to understand what debts the creditors are seeking to collect and whether the probate estate is obligated to pay them. There is a procedure under Florida probate law that creditors/debt collectors must follow, in order to be paid from the probate estate. If you have any questions or need guidance administering an estate, it is beneficial to consult with a skilled probate attorney.