It is not uncommon for debt collectors to try to collect on the debts of the deceased. However, the Federal Trade Commission has published a consumer alert to let consumers know that a beneficiary usually has no legal responsibility when it comes to repaying a deceased relative’s debts unless they were a co-signer or guarantor on the debt.
A decedent’s estate is generally responsible for paying any outstanding debts. These will usually be deducted from the estate and whatever remains will be divided according to instructions left in a will. If the estate does not have the funds to pay the debts, they will go unpaid.
If you were left the proceeds of a life insurance policy, payable-on-death accounts or transfer-on-death accounts, those monies cannot be touched by creditors.
There are some exceptions to this – one of which is when a spouse co-signs a loan, they would be responsible for that debt upon the death of the other spouse. However, a debt collector has to go through the probate process to collect the debt. And since California is a community property state, debts that were incurred jointly are considered community debt and a surviving spouse will be responsible for repayment.
The Flanigan Law Group provides Southern California residents with personal attention for estate planning, administration and litigation legal services. When disputes between families, arise, they are very successful in resolving legal estate issues quickly and efficiently while preserving financial and emotional resources. Contact the Flanigan Law Group at 949-450-0042.