If you're an executor trying to handle an estate that has debts, you must read this new article from The New York Times. It talks about who is responsible for debts and what has to be paid before beneficiaries receive their inheritances. Although this article is American, the legal situation is the same here in Canada. Click here to read the article.
I'd like to draw your attention to the part of the article that talks about collection agencies trying to convince you that you're personally responsible for debts, even when you're not. I know of many cases where collection agencies have tried this. If it's happening to you, find out your legal rights and stand your ground.
What an interesting article. Thank you for posting for all to see, and more importantly, learn from. People need to be careful not to be bullied by debt collectors, and know their rights when it comes to their money situation, whatever it may be. A great tip when dealing with overwhelming debt is to prioritize and assess where you spend. Keep a journal if you need to. But overall know that it’s not the end of the world.
ReplyDeleteHi YourMoney,
ReplyDeleteThanks for your comment. Dealing with estate debts is a huge challenge for many executors, as it is for family members left behind.
Lynne
Hi Lynn,
ReplyDeleteMy husband is executor on my MILs estate. There was a home which needed to be sold due to the mortgages on the home. There was a small amount of money from the sale of the home, but not enough to cover all her credit card debt. How does my husband determine who is getting paid what? It is all unsecured debt, ie retail credit cards, etc. Is there a formula he must follow when figuring this out. We just don't want to end up personally responsible for the debt,. He is being pressured by some and not by others.
Whatever happens, your husband is not going to become personally responsible for his mother's debts. An executor is not required to use his own money to satisfy estate debts, so rest easy on that part of it.
DeleteIf all of the debts are unsecured, the best thing your husband could do is work out how much is available on the dollar to the creditors proportionately. He can make them (all at the same time) an offer to take that amount on the dollar. If necessary, he can back up his offer by showing what is in the estate and what is to be paid. Almost every creditor will take something rather than nothing, and nobody wants to sue an estate where there is just nothing to get. Assuming they agree to the offer, he should be sure to get releases from them so that they don't try to come back at him later.
Lynne