Heirs’ Responsibilities After a Death

by Emily Guy Birken · 25 comments

None of us like to think about our own or our loved ones’ mortality, but ignoring that eventuality will not make a stressful situation any easier. When a family member dies, it’s important for you to know what responsibilities you might be facing. Here is a breakdown of what you can expect if a family member dies and leaves debts behind:

Paying From the Estate

After a death, the executor of the deceased’s will is responsible for notifying creditors of the death. At that point, the creditors submit proof of the debts, and ask for repayment from the estate. The executor will then pay off the debts, first by using whatever cash the deceased left, and then by liquidating whatever assets are left. If there is still not enough to pay off the debts, then the estate is declared insolvent. The creditors cannot then go after the heirs — unless they were cosigners on any of the debts.

When the estate pays the creditors, secured debts (meaning debts with an asset attached, like a home or a car) are paid first, while unsecured debts (generally, credit cards) are paid afterwards. This means that the unsecured debts might not receive a payment in the case of an insolvent estate.

Credit Card Debt

Creditors will do what they can to see that a debt is paid. In most cases, that simply means that debts must be paid off before any assets can be passed on to the beneficiaries of a will. When there is no money in the estate to pay off a credit card debt, creditors will generally close the account and forgive the debt. However, as we all know, creditors can be quite tenacious. Often, creditors will attempt to collect payment from the heirs, even though there is usually no personal liability if the estate is insolvent. If you are hounded by a creditor for a deceased family member’s account, discuss the situation with a lawyer before you make any payments.

The one caveat about personal liability has to do with community property states. In those states, any account opened by one spouse could automatically be considered a joint account, in which case the surviving spouse could be considered liable for the debt. Again, an estate lawyer can help a spouse in that case to determine the best course of action.

It’s important to note that the 2009 Credit Card Act has now made it illegal for credit card companies to add additional fees or penalties to an account while the estate is being probated.

Dealing with the IRS

If a spouse passes away while still owing back taxes, the surviving spouse must pay the IRS both those back taxes and any current taxes owed. In the year of the death, the spouse must file taxes for the deceased’s final year of income, and s/he may file a final joint income tax return, although there must be a note of the death when filing.

The IRS will hold spouses liable for tax debt, but it will not hold any other family members responsible. However, as with any other debt, the estate must pay any taxes owed before heirs can claim their inheritance.

Life Insurance

In general, life insurance will not be considered part of the estate, and is safe from creditors. Since the insurance company pays the benefits directly to the survivor, the money is never placed in the deceased’s name, and is therefore not in the estate. There are a couple of exceptions to this, however. First, if the deceased names the estate as the beneficiary, rather than an individual, then that money is fair game for creditors trying to collect from the estate. In general, it’s a good idea to name a specific beneficiary for this reason.

A second way that a life insurance payout might be taken by creditors is if the beneficiary is a cosigner on any of the debts. In that case, the creditor has the right to sue the surviving cosigner for the balance if s/he does not continue making payments on the debt.

It is important to note that there is a difference between being a cosigner and an authorized user on a credit card. An authorized user did not sign the application and is simply allowed by the signer to use the card, which means s/he is not liable for the debt incurred.

The Bottom Line

Know your rights and responsibilities before you have to deal with the fallout of a death in the family. Familiarizing yourself with what you might have to deal with will make a stressful and sad time easier to manage.

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{ 25 comments… read them below or add one }

Drew March 30, 2012 at 8:54 am

I’m the nominated executor (still some years away I hope), so I found this very interesting and useful. Thank you.


Jonathan@Friends and Money March 31, 2012 at 4:26 am

Very good advice, especially about how some debt organisations work in trying to transfer the debt of an individual to their heirs. The fact is that there is no personal liability as you correctly point out, but it’s fustrating how companies hound people at such a difficult time.


Jean April 1, 2012 at 7:25 am

Good tips. It is defintiely a hard topic to deal with for everyone but like you said, it has to be dealt with, otherwise the hassles for the survivors will be numerous.



Lancia Thema April 2, 2012 at 3:30 am

I’ve just subscribed to your newsletter, and printed your mini saving guide..I have some questions and I’d like to email you later.


Marbella April 2, 2012 at 6:37 am

Most people have no burial insurance, or the compliance insurance when they die. This is now when you plan for your partner and your children so they do not get any problems later.


direct lenders @ Harry April 2, 2012 at 9:44 pm

No Worry Dude! It our moral duty to know responsibilities and property of our family member after death. Its very necessary to social balance.


Christine April 6, 2012 at 7:46 pm

My mom took out a burial insurance policy. However, she recently found an “Anatomy Gift Registry” where when you die, you can donate your body to the company and they pick you up, research you, cremate you, and then send you back to your family for free. She has already filled out the paperwork.


AJ April 8, 2012 at 4:04 pm

Concerning taxes the author wrote: “If a spouse passes away while still owing back taxes, the surviving spouse must pay the IRS both those back taxes and any current taxes owed.”

This statement is true whether or not there has been a death. Joint tax returns do not distinguish between who owed the taxes. It is “joint”.

However, there is something called “injured spouse” and “innocent spouse.” For a discussion on the difference, go to http://www.irs.gov/newsroom/article/0,,id=256031,00.html


Robert April 9, 2012 at 4:39 pm

My mom was assigned as executrix for my brother’s estate when he died. Fortunately, the legal services were covered by Lowe’s. You should check to see if yours is covered by your employer. Professional legal advice was critical to her properly administering the estate. BTW, his 18 year old son received one-fourth of his insurance and 401(k) accounts and promptly bought 2 cars…not to be outdone, his 21 year old daughter bought herself 2 new cars. The other half of his estate is waiting for 2 children to turn 18. Please, please talk to a lawyer about a trust if your beneficiaries are less than frugal with ‘found money.’


Craig March 20, 2013 at 11:03 pm

My stepdad is bed-ridden with cancer. He will be passing in the days coming. My mom and him have no joint accounts. He has a living trust in place that names his daughters and brother as beneficiaries to his property(home, truck, boat, motorcycle and cash.) He does not have medical insurance and the bills are beginning to pile up. Will she be responsible to pay that debt?! She isn’t getting anything, nor does she want anything, as far as financial gain goes, but she is very worried that she will be stuck with his medical bills because they are married. Can anyone give me some guidance?


AJ March 21, 2013 at 5:50 am


My sincerest condolences on your pending loss.

As far as your mother’s financial rssponsibilities, it depends. Here’s some free advice but keep in mind you get what you pay for.



melissa April 27, 2013 at 12:18 pm

My mom just passed on the 5th.. She spent the last 6 weeks of her life in a nursing home. Her insurance denied payment to them. $8000 bill is owed. There is no money. She owned her home, and had a legal TOD done for it to transfer to my sister. Can the nursing home try to or force my sister to sell to pay that debt? Since technicaly the home is now owned by my sister.


Vicki Goff November 12, 2014 at 6:37 am

My husband passed away and left me with huge credit card debts and no money. There is a will but we own nothing but our unpaid for home. Can the creditors take my bank accounts money( small amount) or attach my mothers account with my name on it? I live in Washington State


Gary July 29, 2014 at 10:41 am

I have a question for an attorney out there. My close friend of mine is owed a lot of money from someone who took anger management classes from her for many years, and did not pay a great portion of her fee. He agreed to sign a notarized document staying he would pay her back with up to 75% of his mother’s estate upon the event of his mother’s death (the parents had only one child) for all services owed.
He also said he would continue making monthly payments to my friend to pay his past debt even if he left the area, which he now has (he ran out on her and her husband – they have a disabled child who has extensive medical bills). He has not paid my friend a dime. Upon the event of the mother’s death, can my friend go after this guy for what is owed her? (She has the original signed, notarized document, witnessed by two people. Thanks in advance for your response.
Gary C.


Janice September 4, 2014 at 11:21 am

I’m trying to figure out utilities in all this. My mom died, and she owed money to the municipal authority for sewage. I lived with her along with my brother and as soon as she died we looked for a found a place and moved out of her house. We were there for about three months after her death. Can they hold us responsible for her bill? I had wanted to try to pay it but couldn’t afford to but they’ve now put my name on the bill.


Cora Taft January 28, 2015 at 9:03 am

My question is a unique one I would supose. My friends mother passed away in 04. Her mother for 15 yrs had suffered with alziemers. Her mother was benificiary of her sister insurance policy. The sister past away first and my friends mother never cash in the policy . My friend found the policy ànd is her only çhild . My question is she entitle to the claim ?


bellyfat February 20, 2015 at 7:40 pm

In that case, the creditor has the right to sue the surviving cosigner for the balance if s/he does not continue making payments on the debt.


Linda February 25, 2015 at 11:56 pm

My brother passed away and i was beneficiary of his savings acct. (POD)and cds. Going through his papers he owes back taxes. The estate is not being opened as the executor, his friend, said there is no money to do it (lawyers advice who did the will)…property was left to co-owners. There was no spouse, he was not married. He had three old basically worthless vehicles.
Will i have to pay his back taxes with the money from what i got from his accounts?


Tom March 1, 2015 at 8:40 am

my daughter is the executor and is incompetent as far as I’m concerned unfortunately. She is my executor in my will and wondering if she would be responsible for back taxes or bills if I were to pass away. Will they harass her will they force her to pay as


AJ March 1, 2015 at 9:10 am


Your executor doesn’t have to be anyone connected with the inheritance nor even be family. Is there a friend or lawyer that can handle it instead?

From what I understand, the Estate owes the taxes, not the heirs.

Good luck with this very important task. -AJ


Tom March 1, 2015 at 2:04 pm

Thank you very much AJ. I appreciate the advice.


Tom March 2, 2015 at 5:55 am

another question if I destroy my will will that be enough to protect my daughter from the IRS if I owe them as well? My health is deteriorating and very concerned in case I were to pass. is destroying the will good enough or is it recorded in the court?. I’m about to lose everything as well and close to become homeless that is also the main thing that really scares me.I am within a month of becoming addicted I have no way of even moving my furniture or the funds to have somebody do so or anywhere to go I am also disabled. And on disability which there’s no way I can make ends meet at this point. I’ll be forced to take my daughter to her mother’s house where there is limited income as well. My daughter also has no means of transportation or a job


AJ March 2, 2015 at 4:11 pm


So sorry you are doing well. Unless your signed something saying she was responsible, the Estate not the heirs owe the debt.


Tom March 2, 2015 at 6:10 am

on the way from being evicted not addicted


Grant March 22, 2015 at 5:46 am

My moms husband died 2 months ago. Back in late 2913 he bought a 2014 Chevy Truck. When he died he owe close to 55000. My mom’s name is not on the truck at all. Can the estate sell the truck for let’s say 5000.00.


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