Business Debt, Collections Can A Debt Holder Collect After Death Of Deptor

R

rjlocal22

New Member
Jurisdiction
Pennsylvania
Hello,
Is a dead person's estate still liable for unpaid debt? I expect to be debt free by December 2021. But at 81 years old, it's possible I may pass away before that and I am in the process of looking up some guides on making out my Last Will and Testament. and I want things to go smoothly without court intervention. The only assets I have is a paid up life insurance policy, monthly pension, some social security, the contents of my apartment and a 2004 toyota. I am single with no children.
At the present time, I have no savings as whatever I can afford goes toward paying off my debt.
 
rjlocal22 said:
Hello,
Is a dead person's estate still liable for unpaid debt? I expect to be debt free by December 2021. But at 81 years old, it's possible I may pass away before that and I am in the process of looking up some guides on making out my Last Will and Testament. and I want things to go smoothly without court intervention. The only assets I have is a paid up life insurance policy, monthly pension, some social security, the contents of my apartment and a 2004 toyota. I am single with no children.
At the present time, I have no savings as whatever I can afford goes toward paying off my debt.
Click to expand...
Yes, your estate would pay off your outstanding debt.. Your life insurance would go directly to the beneficiary and not be a part of the estate.
 
Your estate would pay off your outstanding debt.

But only to the extent that your estate had assets with which to pay your debts.

Your social security would stop.

Your pension would stop unless you had arranged for a continuation of partial payments to a beneficiary. That would not be part of the estate.

Your life insurance would go to your beneficiary.

If your checking account has a beneficiary designation (it should) it will also bypass your estate.

That leaves your car and your household goods that would have to be sold to pay your debts. If that only covers part of your debt, then the rest is unpayable and your creditors lose.
 
Keep in mind that funeral expenses top the list of what your estate pays out, so if those items that are actually in your estate cover that, or not even that, then the other creditors also get nothing.
 
rjlocal22 said:
Is a dead person's estate still liable for unpaid debt?
Click to expand...

If the debtor was liable when he/she was alive, then his/her estate becomes liable upon his/her death.

rjlocal22 said:
I am in the process of looking up some guides on making out my Last Will and Testament. and I want things to go smoothly without court intervention.
Click to expand...

Given your limited assets, it's unlikely any court will become involved. In fact, my guess is that no one would even go to the trouble of even informal estate administration.

Note that the life insurance proceeds pass directly to your designated beneficiary(ies) and are not part of your estate.
 
rjlocal22 said:
Thanks All.
I will check into my checking account to see if a beneficiary is named.
Click to expand...


Most joint bank accounts come with what's called the "right of survivorship", meaning that when one owner dies, the other will automatically be the sole owner of the account (which means ALL FUNDS in the account).

When one owner dies, the funds in the account belong to the survivor without probate.

If you wish to choose that route, make sure you trust the other party unequivocally.

If you choose to make your single party checking account (with only you) become a "joint checking account with right of survivorship" the other party has access and control over EVERY dollar in the account, and will be able to withdraw monies just as you do solely today.
 
army judge said:
Most joint bank accounts come with what's called the "right of survivorship", meaning that when one owner dies, the other will automatically be the sole owner of the account (which means ALL FUNDS in the account).

When one owner dies, the funds in the account belong to the survivor without probate.

If you wish to choose that route, make sure you trust the other party unequivocally.

If you choose to make your single party checking account (with only you) become a "joint checking account with right of survivorship" the other party has access and control over EVERY dollar in the account, and will be able to withdraw monies just as you do solely today.
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A "transfer on death" designation on the account gets around that problem.
 
Judge, I edited your post to avoid copyright infringement and potential lawsuits.

In the future, please just provide links to interesting source material instead of copying them verbatim.

And if you quote partial source material please make sure you give credit and provide a link to the full material.
 
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I just saw a paragraph from a company that provides legal forms. Now If I understand it right, My assets are in excess of the federal tax exclusion. So this appears to eliminate me from creating
a standard last will and testament. I have a $14,000 paid up life insurance policy and the federal tax rate is less then that for a single person. The following is the paragraph.

A standard will is usually called a "last will and testament" The will specifies how the person's assets will be distributed and who will be in charge of the distribution. The standard will is suited for individuals and couples with total assets (including life insurance and retirement plans) of less than the exclusion threshold for the federal estate tax, which is currently $11,580,000 for a single person.

So what type of will do I create?
 
I think you misread that. There's no federal tax on your estate unless it's worth MORE than $11,580,000.

Unfortunately, PA has an inheritance tax of varying rates depending on who gets what though I don't think it applies to life insurance proceeds that bypass the estate.

More on that at:

Inheritance Tax

There are lawyers that will create simple wills for a few hundred dollars. See if you can find one.
 
rjlocal22 said:
My assets are in excess of the federal tax exclusion.
Click to expand...

rjlocal22 said:
the exclusion threshold for the federal estate tax . . . is currently $11,580,000 for a single person.
Click to expand...

So...despite your prior statement that "[t]he only assets [you] have is [sic] a paid up life insurance policy, monthly pension, some social security, the contents of my apartment and a 2004 [T]oyota," you believe your estate will be worth more than $11.5 million?

rjlocal22 said:
So what type of will do I create?
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Not sure what you mean by "type of will." However, based on the list of assets you mentioned, I'm not sure you need a will at all.
 
rjlocal22 said:
Opps, That amount is the result of holding down the keyboard key to long and i did not spot it.$11,580 is the correct figure.
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For what? The current exclusion for federal estate taxes is $11,700,000 (it was $11,580,000 in 2020).

Based on the assets you mention, your probate estate* probably would be worth much less than $10,000 (with most of the value coming from the Toyota). As I mentioned previously, given your limited assets, it's not unlikely that no one would even go to the trouble of even informal estate administration.

* - "Probate estate" means those assets that do not pass by way of a beneficiary designation, trust or joint tenancy. Most of the things you mentioned would pass by beneficiary designation, so all that's left is the Toyota (Corolla? Land Cruiser? Something in between?) and the contents of your apartment.
 

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