What happens to debt when someone dies in Doña Ana County?

Michelle Ungvarsky (Estrada Law Office) | March, 2016 | Columns, Features


Michele Ungvarsky of Estrada Law is an estate planning attorney. She can be reached at 556-2462.

Michele Ungvarsky of Estrada Law is an estate planning attorney. She can be reached at 556-2462.

Will and estate lawyers in Doña Ana County are becoming intimately aware of their clients’ financial situations, and it’s just a fact of life that many people have considerable debt. Whether it is the person setting up an estate plan or one who has inherited from it, there are often questions regarding what happens to that debt. Does money come out of the estate for medical bills? Are adult children responsible for credit cards? What happens to the mortgage?

As with so many aspects of law, the answers are somewhat complex, but here’s a basic look at what you and your Las Cruces will and estate lawyer might expect to see:

• Mortgage – When a home is inherited, its mortgage usually is, too. That’s not to say that banks won’t work with the heir, but they will expect payments to be made. In cases where the mortgage is more than the home is worth, the bank may allow it to be sold on a “short sale” (meaning for less than what is owed), and the heir will probably not be required to pay the difference.

• Taxes – If property is left behind, there will likely be taxes owed on it. The individual may also have some unpaid income taxes that need to be taken care of out of the estate. Taxes are usually one of the highest priorities, needing to be paid before other debts.

• Medical – This is an area where things can get a little dicey, so definitely work with an estate planning lawyer in Doña Ana County to minimize the amount of medical debt left behind. Medicaid debt may need to be repaid from the estate, and the state can place a lien on the deceased’s house in order to get the money. Again, the responsibility for medical and nursing home expenses is very complex and should be taken to a lawyer.

• Credit cards – As long as you aren’t a co-signer on a credit card, you aren’t personally responsible for them. The companies can call the executor in order to collect from the estate, although there is a finite time frame in which to do so.

So, some debts must be paid from the estate, but others can haunt family members. Remember, too, that when a debt is paid for by the estate, it lowers the overall amount that is left to be inherited. A good will and estate lawyer will help you deal with this issue properly when the time comes, or help you proactively plan ahead by working to limit the value of your estate while protecting its assets using legal tools such as trusts.

To discover all of your option when dealing with the debt of an estate, contact our office at 556-2462.



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