When someone dies in Ohio, their personal property becomes the property of their estate. Their heirs or chosen beneficiaries can inherit those assets at the end of the probate process. Any debts that they still owe at the time of their passing may become the responsibility of their estate.
Family members who expect to inherit from an estate and personal representatives managing probate proceedings often have questions about financial obligations. Debts are a crucial consideration during Ohio probate proceedings.
What impact does debt usually have on estate administration?
Representatives have to handle outstanding debts
The personal representative or executor of an Ohio estate usually doesn’t have direct liability for the debts owed by the deceased. Unless they co-signed the initial loan, the debt becomes the obligation of the estate itself, not the person administering the estate.
However, mistakes during the probate process could lead to personal liability. It is therefore very important for personal representatives to follow the right procedure when communicating with creditors and distributing assets. They typically need to pay valid debts after creditors make claims in probate court. They settle debts before they distribute any property to the beneficiaries of the estate.
What if debts exceed the value of the estate?
It is somewhat common for a personal representative to discover that the debts owed by an estate are worth more than the estate itself. In such circumstances, they may need help evaluating the debts to make sure that they handle them in the right order.
Certain debts, like probate court costs and end-of-life medical care expenses, take priority over other debts, like credit card balance. The personal representative may need to sell off the valuable property of the decedents to pay as much of their debt as possible.
In cases where the debts owed are higher in value than the entirety of the estate’s assets, the beneficiaries of the estate may not inherit anything. If the personal representative makes mistakes by distributing assets improperly, they may then have a degree of personal liability for the debts they didn’t resolve.
Properly handling debts is an important component of estate administration. Personal representatives and beneficiaries who understand what happens with debt-related claims are less likely to make mistakes or have unrealistic expectations that can complicate the probate process.