Q: What happens, if a person passes away and no one files probate because the estate has no assets? Do any of the deceased relatives become liable for taxes owed by the person that died? Would the relatives have to pay off the debts to the dead person’s creditors?
A: When a person dies, the legal process in place to take care of the assets and liabilities of that person is through the probate court. Through the probate court, the deceased person’s assets get distributed and the debts of the deceased are taken care of.
While not all assets may go through probate, those assets that do go through probate are distributed in accordance with the wishes set forth in the will signed by the deceased. If he or she had no will, the assets will pass to the deceased person’s relatives in accordance with the laws in which the will is probated or in some more complicated cases, the distribution might be dependent on where the property is located.
If a person has assets that he or she has put into a trust, those assets do not need to go through the probate court as those assets remain in the trust and are distributed in accordance with the terms of the trust. Insurance proceeds and retirement accounts with beneficiaries named will distribute those assets as required by the terms of the insurance policies and the retirement accounts. Finally, money and assets held in joint tenancy with rights of survivorship will automatically pass at the time of the decedent’s death to the survivor on the account or the survivor owning jointly a home.
The probate process is also there to give notice to creditors to come to the court and request payment for any money owed to that creditor. If there are no assets in the estate, the creditors will get no money on the amounts they are owed.
While you may want to ask an attorney that specializes in probate issues any specific questions you might have, the intent of the probate system is to finalize the distribution of assets and the payment of debts of a decedent. A final accounting of all assets distributed and all creditors paid might be made to the court and upon that final accounting, the probate estate is closed.
Once the estate is closed, creditors of the decedent’s estate that failed to show up after having been given notice of probate might be barred from trying to collect a debt against the decedent and the representative of the decedent in the probate proceedings.
So as far as your question is concerned, in general the debts of the deceased are his or her debts and not the debts of the family when you go through probate. If there are no assets whatsoever, there are no assets to probate and the creditors rights to pursue the estate of the deceased would continue as they would not be extinguished in probate. Having said that, in the unlikely event that any money would appear after a person dies the family might have to use that money to pay off the debts of the creditors before keeping any of it.
While the laws and the timing for probate differ from state to state, the essence of probate is the same in attempting to distribute assets and pay off the debts of the decedent.
You should know, however, that in some cases the debts of one person can be collected against a spouse or other family member. For example, if you have a joint credit card with the deceased and you have used that card to run up the balance on the card to buy things for yourself, the credit card company might try to collect the balance owed against you in some circumstances.
When it comes to health care bills, you might find that medical care expenses for the care of a loved one might be billed to the deceased but the health care provided might go after the spouse or child for those health care costs. In some states, there are laws that permit the beneficiary of the service to become responsible for those debts in certain situations.
In these two situations, you might find a person liable for those debts whether or not a person has died. The death does not cause the debt to transfer to the other family member or user of the credit card. The death does not cause the debt to transfer to the other family member or users of the credit card. The debt would exist in those states that allow creditors the beneficiary of the services or user of the card at the time the service is provided or the goods are purchased.”
The subsequent death of the primary person on the debt would give rise to the executor of the estate to pay those debts during the probate proceedings and if the debts were not paid, the creditor could still go after the party that benefited from the services or goods purchased.