Collecting Debts on Behalf of Your Deceased Loved One Q&As

It’s common to partake in financial transactions that lead to owed money. For example, many people lend funds or lease property. However, the situation takes a unique turn when the individual entitled to receive this money passes away. The question that arises is whether someone else can step in to claim these outstanding debts. Here are Q&As to help if your loved one was owed money and you are collecting debts on their behalf.

Does the Debt Die with the Person?

The debt survives the creditor’s death and is owed to the deceased creditor’s estate. The estate is entitled to collect the debt as part of the probate process. Likewise, if the debt is owed to the trust established by the deceased individual, the trust is entitled to pursue debt collection.

Who Can Collect the Debt?

Prior to assuming any responsibilities on behalf of a deceased person’s estate, individuals must be appointed through the probate court. In cases where the deceased person had a will, it’s likely that they designated a trusted individual to serve as their executor. However, if a will is absent, a family member can request the court to appoint them as administrator. Once appointed, the executor or administrator is authorized to collect the debt. In the case of a debt owed to a trust established by a deceased individual, the successor trustee is responsible for making efforts to recover the outstanding amount owed.

How Can an Executor or Trustee Discover If the Deceased Person Was Owed Money?

Every executor or trustee should thoroughly review the financial records of the deceased person to look for any indications of outstanding debts. Ideally, these records would include written agreements that establish both the existence of the debt and its repayment terms. If there is no formal contract, other written evidence that shows money owed can prove the existence of the debt. Furthermore, if the deceased individual maintained records that demonstrate the presence of a debt and regular payments received, these documents can serve as valuable evidence for confirming the debt.

What Happens After the Debt Is Discovered?

Upon identifying a debt owed to the deceased person, the executor or trustee should determine whether there are any outstanding amounts. Then, they should issue an official written notification to the debtor. Additionally, this notice should clarify that the estate has assumed the role of the new creditor. It should let the debtor know that any forthcoming payments should be directed to the estate through the executor or trustee.

What If the Debtor Will Not Pay the Amount Due?

Legal assistance may be needed if the debtor will not pay what is owed. For example, a lawyer can send a demand letter to the debtor or initiate legal action on the estate’s behalf to recover the debt.

Law Stein Anderson Can Help

If your loved one has passed away, we can help guide you through the probate process. Our services include collecting, protecting, and preparing an inventory of all of the assets in the estate, including debts owed. Having our guidance will provide peace of mind. We’ll ensure that you successfully fulfill your responsibilities during a challenging and emotionally charged period. If you require assistance, please don’t hesitate to contact us today to schedule an appointment.