It’s a scenario that’s familiar to a lot of people. A family member dies, and you’re the next of kin. You’re about to inherit a lot, and we’re not talking about money. Actually, it’s the exact opposite sometimes.
Many people inherit a whole lot of responsibility for managing the deceased’s debt. That’s right. Instead of inheriting money, some people deal with an estate that’s in debt, and the assets are going to creditors. If you’re one of those people, here’s what to do.
First, Go Over Financials as You Wait for Creditors to File Claims
The first thing you’ll need to do is go over the financials. Gather any documents you can including the:
- Last will and testament if one exists
- Any life insurance policies
- Personal records that are needed to claim benefits
- Bills and monthly statements
- Bank account statements
- Income and wage documents
This will give you a good idea of where the estate stands in terms of assets and debts. Even if there’s a debt, it’s not necessarily owed unless the creditor files a claim against the deceased’s estate. How long a creditor has to file a claim depends on the state, so plan for paying it up to that point for sure.
Next, Arrange Direct Cremation Services
If you’re already pretty sure a family member’s estate is not going to cover the existing debt, then the disposition is one more expense – and it’s one that must be paid by the family. For that reason, many families choose direct cremation.
Direct cremation is the most cost effective form of disposition, partly because it’s very simple and straightforward. At Direct Cremate we provide services for just $545. Compare that to the median cost of a traditional funeral, which is $8,300. And that doesn’t factor in the cost of the burial plot.
See If You Can Claim Benefits for Disposition Costs
Funeral and disposition expenses can hit a family hard in many ways, especially if they aren’t expecting it. Fortunately, there could be assistance to ease the financial burden. The deceased may be eligible for disposition benefits that cover the cost of cremation. If the deceased was a veteran, the entire cost may be covered.
Start Paying Creditors – But Not Out of Your Own Pocket
By the time the disposition is handled, it will be time to turn your attention to paying off the deceased’s debts. The probate court will verify creditor claims and ensure that they get paid. However, family members can’t be forced to pay the debts if there isn’t enough funds in the bank accounts.
Instead, assets may need to be sold off in order to pay creditors. For example, a car may be sold to pay off an auto loan. Or you may need to sell a few pieces of jewelry to pay off credit card debt.
Another option is arranging a new line of debt with the creditor. This could be the case if a benefactor wants to take over a mortgage. The loan may have a death clause that allows for such a solution to avoid foreclosure.
Managing an estate’s debt is a huge task all on its own. If you need to also arrange inexpensive direct cremation services we can help. Give us a call or text any hour of the day and we’ll take it from there.
