Sometimes when a person dies in Kansas or Oklahoma, that person leaves behind an insolvent estate. In this situation, the deceased person’s family members often have a lot of questions about the debts left behind. Many people want to know, for example, if they, as a relative of the deceased, will be responsible for paying any unpaid debts. Even though this concern is common, it is rarely a significant issue. To help explain why this is true, let’s take a look at insolvent estates and what happens to them.
What is an insolvent estate?
When someone dies, that person typically leaves behind both debts and assets. In general, an insolvent estate is one in which the total value of the assets is less than that of the debt left behind. So, when someone leaves behind an insolvent estate, all the estate assets will have to go to pay back the remaining debts. Further, because there is less money than the amount of debt, some of the debt will have to go unpaid.
How do creditors get repaid when there is an insolvent estate?
After someone dies, someone will have to take over all of the estate property. That person, called a personal representative, executor, or estate administrator, will have to allow creditors to file a claim with the estate. Once all the creditors have filed claims, it’s up to the executor to determine which debts are valid, and then determine the order in which they get repaid. To do this, the executor must abide by the laws that the state has adopted that determine the order in which the creditors are compensated.
Will I, as a relative of the deceased, have to pay back unpaid debt?
As a general principle, relatives of deceased people do not have to repay the debts their family members leave behind. For example, if your brother dies leaving behind $10,000 in assets and $50,000 in unpaid credit card bills, it will not fall to you to repay the $40,000 in unpaid debt. Instead, the creditors who hold that debt will have to go unpaid.
Is there any way I might have to repay unpaid insolvent estate debts?
Yes. If you held joint debts with the decedent, you are still responsible for paying back the money you owe. So, in the example above, if you and your brother were joint debt holders on all of the credit cards he used to accumulate the $50,000 in unpaid debts, you will be responsible for repaying the unpaid debts because you are a joint debtor. Note, this is true even if your brother was the only person to use the credit cards. As long as your name is on the debt, you’re responsible for it.
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