Many people worry about what happens to a loved one’s debts after they pass away. In particular, they often wonder if they could inherit those debts or be held personally responsible for the deceased’s financial obligations. This uncertainty can cause significant stress, as family members are left worried about how the debts will be managed. The good news is that in most cases, beneficiaries will not be personally liable for covering these debts. Understanding the legal process can help alleviate these concerns and provide peace of mind. An estate planning attorney can also can help answer questions on how debt is handled after death under Arkansas law.
Debts in Arkansas Will Go Through Probate
When a person dies in Arkansas, their outstanding debts do not just simply die with them. Rather, these debts, along with any assets, will have to go through probate, which is managed by the executor of the deceased’s estate. The executor of the estate, or personal representative, is a court-appointed individual, often an attorney, who is responsible for managing all of the deceased’s assets. This includes paying off valid debts and distributing any remaining property to the legal beneficiaries. Probate is a formal legal process that is designed to make sure that all legitimate debts are settled using the estate’s assets before anything is passed on to heirs.
How Debt Is Paid By An Estate After a Death in Arkansas
After someone passes away, Arkansas law requires that the executor of the estate give proper legal notice to all potential creditors. This notice must be published in a local newspaper for two consecutive weeks. Once this notice is given, creditors have a six-month window to file claims against the estate to recover what they are owed. If a creditor fails to file within that timeframe, they are permanently barred from pursuing the debt. If a claim is filed and deemed valid, the debt is required to be paid from the estate’s assets.
If an estate has more debt than assets, any remaining funds will be used to pay creditors according to a legally established order of priority. For example, burial or funeral expenses are given top priority and federal tax obligations must be paid before other types of debts. Payments will continue in appropriate order or priority until the estate’s assets are fully depleted. Any remaining unpaid debts will be written. In situations where the estate has no assets left, creditors will not be paid, and heirs or beneficiaries will not be held personally liable for covering those debts.
Can You Inherit Debt in Arkansas?
If a loved one dies with debt, can creditors pursue them for payment? In other words, can someone “inherit” a deceased person’s debt? The good news is that debt is not inherited. You cannot be held personally responsible for someone else’s debt unless you were already legally connected to it.
There are specific situations in which a surviving individual may still be liable. For example, if you shared a joint credit card account with the decedent, were listed as a co-signer or guarantor on a loan, or were named on a mortgage or lien, you may be responsible for the remaining balance. In such cases, your obligation comes not from inheritance, but from your existing legal connection to the debt.
Contact L. Jennings Law Today Arkansas Estate Planning
L. Jennings Law is an Arkansas firm that helps individuals in all area of estate planning. While beneficiaries are generally not personally responsible for a deceased person’s debts, any inheritance they receive may be reduced if the estate’s assets are needed to pay off those obligations. To help ensure your loved ones receive the inheritance you intend for them, it’s important to consult with an experienced estate planning attorney who can guide you in protecting your assets and planning effectively for the future. Contact our firm to get started.