Question: My father recently passed away. He owes more than he has in assets. As his surviving child, am I responsible for his debt?
Answer: Your father’s Estate is responsible to pay his creditors with the assets remaining in his estate. Creditors are paid in accordance with priorities established by New York State law.
- Administration and funeral expenses are the first to be paid. Administration expenses include any legal fees and any costs associated with your father’s estate like probate fees, appraisals, etc.
- Money owed to the government such as income taxes and estate taxes.
- Payment of property taxes for real property he owed which accrued prior to your father’s death. If there are not enough estate assets to pay this debt, then whatever estate assets are available would be used to pay off the debts in these categories.
- Judgment creditors get paid next. If your father was on Medicaid, the Department of Social Services has a priority for its claims. This means that the Department of Social Services gets paid before other judgment creditors.
- Secured creditors such as a mortgage, home equity or car loan.
- Unsecured creditors (such as credit cards and bills) are the last to be paid.
It is the responsibility of the executor or administrator to notify creditors of your father’s death. The creditors then have seven months to file a claim against the estate. It is important that the executor/administrator follow the priority order when paying claims. If they fail to do so, they can be held personally liable if lower priority creditors are paid ahead of higher priority creditors.
If there are insufficient assets in your father’s estate to pay all of his creditors, you as his child are not personally responsible for his debt. If there are monies remaining after payment to all creditors, the balance of your father’s estate would be paid out in accordance with his Will or with the laws of intestacy if there is no Will.
– Nancy Burner, Esq. and Maria Johnson, Esq.