Who Pays My Debts After I Die?

Many people make the faulty presumption that when a loved one dies, so does their debt. Unfortunately, this is not true. The decedent’s estate is responsible for paying off debts left by the decedent.

In New York, the executor or administrator is not burdened, however, with the task of seeking out and sending notices to all creditors of the estate. New York law puts the responsibility on the creditors themselves to exercise due diligence in sending out regular bills and following up with the fiduciary when they learn of the decedent’s death. Once a creditor is made aware of the decedent’s death, it is up to the creditor to send out a written notice of claim to the fiduciary.

So, the creditor filed the required written claim, now what?

Well, when a person dies with a will, the will controls. What this means is that the estate assets are distributed to those listed in the testator’s will as specified in the will itself. A testator will not usually specify how estate debt is to be paid off in his will. Therefore, once the will is probated, it is the responsibility of the executor to sell estate assets in order to pay the testator’s remaining debt, before he can distribute assets to the beneficiaries.

When you die intestate, or without a will, an administrator is appointed by the Court to handle your estate. The administrator’s job is just like that of executor. Before the administrator can distribute assets in accordance with the laws of intestacy, he must sell off assets in order to pay off the debt of the decedent.

What if the decedent’s estate is insolvent? While the decedent’s estate is responsible for paying off debts, an heir has no personal liability to pay out of their own pocket the debts of the decedent, unless they inherit property from the estate. Therefore, if there is no money in the estate or no assets that can be sold off to pay creditors, family members are not personally responsible for those debts in New York.

To discuss your role as Executor or Administrator and how to pay off your loved one’s debt, call the Law Offices of Albert Goodwin at (212) 233-1233.