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Dallas Estate Litigation and Planning Blog

Do Heirs Acquire Debt in an Estate?

Do Heirs Acquire Debt in an Estate?If you have considerable debt, you may have concerns about passing those debts on to your heirs and loved ones through your estate when you pass away. Likewise, if you are the beneficiary of someone’s estate, you may be concerned about incurring your loved one’s debt and having to pay it back. In limited circumstances, an heir might inherit a debt. Read on for additional information.

Like all other states, Texas has specific codes that govern estates and succession. Texas does not impose estate taxes or inheritance taxes, but the estate may have to pay federal and state income taxes.

Estates and Debts

A decedent may not only have assets, but debts, as well. When the executor or administrator of the estate takes charge of the estate, those debts will have to be accounted for in the estate administration process.

In some instances, a debt may be forgiven upon the death of the debtor, but most of the time, creditors will seek recompense for the money they are owed. Upon someone’s death, all debts become part of the estate, and the estate’s assets must be used to pay off any debts.

By law, the executor or representative of the estate must provide notices to creditors of the estate owner’s passing through the following methods:

  • Publishing a notice in a local newspaper
  • Mailing a notice to the Texas Comptroller of Public Accounts
  • Mailing notice to secured creditors

The notices should be published in the newspaper within 30 days of the executor’s appointment, and notices to secured creditors must be mailed as a certified or registered letter to secured creditors within 60 days of the executor’s appointment. Failing to do so can result in liability issues for the estate’s executor. Executors may also provide notice to unsecured creditors, but it is not required, and there is no established deadline for doing so.

Upon receiving notice of the decedent’s death, creditors will have a certain time to present a claim against the estate to recover their money. Any person or entity owed money by the decedent may present a claim against the estate. These people or entities fall into two categories:

  • Secured creditors – Loans secured by collateral, such as a mortgage or car
  • Unsecured creditors – Loans unsecured by collateral, like credit cards or personal loans

A creditor must present a claim against the estate accompanied by an affidavit to recover money, and the claim must show that it is just. It must account for the money owed. If the creditor is a corporation or other legal entity, then an authorized representative of the entity may present the affidavit.

Priority of Creditors

Do Heirs Acquire Debt in an Estate?Just because a creditor presents a claim against the estate does not mean they will get the money they are owed. In fact, some creditors receive no money if the estate’s assets cannot cover all its debts.

However, certain entities take precedent over others, and the creditors are usually prioritized as follows:

  • The IRS
  • Funeral costs and final expenses up to $15,000
  • Family allowances
  • Administration costs
  • Secured loans
  • Owed child support
  • State taxes
  • Costs of incarceration
  • Medicaid and state medical assistance payments
  • Unsecured loans and other claims

An estate executor or representative has the option to accept or reject a claim, and they have 30 days to decide. If they have not decided after that time, the claim is considered rejected, and the creditor can file suit against the estate in probate court.

Will You Have to Pay Any Debts?

In general, heirs do not inherit debt after a loved one’s passing. In fact, federal student loans may be forgiven, depending on the situation, and credit card debt will not pass down to children. However, you may be responsible for your benefactor’s debts if any of the following applies:

  • You were a co-signer on a loan with the decedent
  • You are their adult child, and they passed off their mortgage to you as an inheritance
  • You were married to them at the time of their passing

Texas is a community property state, and the state considers all assets, property, and debt to be jointly owned by both spouses. You can be held responsible for any debt your partner acquired during your marriage, even if your name is not on the account. However, you are not automatically liable for your spouse’s separate debt, and you need to review your situation with an estate or probate attorney to understand your options.

Contact Us

The experienced Dallas estate litigation attorneys of Staubus and Randall will review your situation and advise you of your rights and options. We are here for you in this difficult time, and you can contact us at 214-691-3411 to request a confidential consultation.

The Firm

The attorneys at Staubus and Randall have over 100 years of combined experience in estate planning, probate, and litigation. We have the knowledge and skills to tackle complex legal issues, such as guardianships, will contests, fiduciary litigation, and trust litigation. We can also handle routine matters, such as estate administration, probating wills, heirship determinations, and other probate court matters.

Staubus and Randall received a preeminent AV rating from Martindale-Hubbell, which is the highest rating possible from a peer-rated legal service. This rating recognizes our hard work, dedication, and the case results we’re able to achieve.

Staubus & Randall Team

What Our Clients Say

"I recently had the occasion to hire Mr. Staubus for a hotly contested Guardianship matter. Mr. Staubus brought a rare combination of effectiveness, reasonableness and understanding of the human element involved. Mr. Staubus handled all things in a calm, highly competent, effective and reasonable way. It could not have been as easy as he made it seem. He's a credit to the Bar."

Jody

"Before retaining the guidance of the Staubus & Randall firm, I was at my wit's end trying to close an uncle's estate as a co-executor. In addition to dealing with difficult heirs, I had other pressing business issues coming up immediately on estate land in the middle of the Eagleford Shale including dealings with pipeline, seismic, oil & gas, and construction companies. The local bank also refused to give me access to information relating to the estate. This quickly became the most stressful and desperate time in my life...and then I found Joseph Legere who truly became my guardian angel. He was able to get all issues resolved efficiently and the estate fully closed. His professionalism, immense legal knowledge on a wide variety of topics, and amazing communication skills took the burdens off of me and quickly got closure. I am forever indebted to this firm for giving me my life back."

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Joann

"Keith Staubus and Julie Blankenship and their team represented me in a jury trial in the probate court where the ownership of the business which I had worked hard to build was at stake. They successfully fought to preserve my business and my professional reputation, working masterfully to gain the support of the jury. I would not hesitate to hire them again in any bet-the-company litigation.”

Karen

"I have required legal representation twice in my life in two separate will contests. Both times I sought assistance from Keith Staubus and Staubus/Randall. Their service, approach, and determination to obtain results exceeded the other attorneys in each case. Mr. Staubus has always come across as genuine while being direct. He gets the process done in a timely manner with results. I will certainly use him again when and if any new challenges arise.”

David

"After my husband's death, I was devastated by having to defend against a vicious dispute over my husband's estate. Julie Blankenship and Keith Staubus made me feel very comfortable in this distressing situation. They were very tough and did an excellent job for me in obtaining a summary judgment in my favor without a full jury trial. I was glad to have them and Diane Walker in my corner to help me achieve an excellent result - I won! If I ever had to go back to probate court, I would hire them again.” - (will and trust construction case)

Flo

"If you need intervention for someone you love but don't know where to turn or who to turn to, Julie Blankenship and Keith Staubus helped me through the most difficult and stressful time in my life with a much loved family member. I now believe that good will triumph over evil. They fought for what was right, and good prevailed." (contested guardianship and will contest)

Janet

"As a professional money manager, I have used Ryan Randall's estate planning services both personally and for my clients. Ryan has exhibited three critical attributes in his work with me: (1) high intellectual capacity, (2) exceptional thoroughness, and (3) a total commitment to integrity. In today's litigious world, it can be quite costly not to "get things done right.” An added bonus to us was that we found one of the nicest people we could imagine.”

John

"I was represented by Keith Staubus as an income beneficiary in a lawsuit with the trustee of a family trust. Utilizing the expertise of a forensic accountant and his own trust expertise, Keith was able to negotiate a judicial modification of the trust providing for the buyout of my income interest for a substantial lump sum payment out of the trust, resulting in a win-win situation for all of the parties. I highly recommend Staubus/Randall for any trust disputes and trust modification actions."

Kathy

"I have been a wealth management specialist and retirement plan consultant with the Dallas/Fort Worth financial community for over 20 years. I have engaged Ryan Randall to work with a number of my best clients over the years, including business owners, professionals and families. My clients always appreciate Ryan’s straightforward approach to estate planning, asset protection planning and business succession planning. He makes even the most sophisticated estate planning strategies understandable."

Larry

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