Debt and Probate: What You Need to Know

A sample of last will and testament with a section about debt payment.

Most people have their legacies, properties, and assets on their minds when drafting their Testament and Last Will. But several other things must be considered and specified in an estate plan.

For example, specifying what happens to your outstanding debts or those of a loved one after they pass away is crucial. If you owed a loan or debt in your lifetime, your family will be responsible for paying for it, depending on your estate’s size and value and the type of the loan.

Is it important to notify creditors?

After a person passes away, their estate executor is responsible for informing the person or institution that provided the debt. While the trust doesn’t mandate that the executors notify the creditors of the debtor’s passing away, doing so will allow the creditors to come forward within a shorter period, and the payment process will be smoother. Once the creditors are notified, they are given a specified period to claim their takings against the estate. Each creditor will be paid for their part from the estate’s proceeds.

If the deceased person didn’t create an estate plan during their lifetime, the probate court then assigns an administrator, who is typically from the immediate family or a close relative. Like a trustee or an executor, an administrator appointed by the court is also authorized to pay the deceased person’s debts from the estate’s takings.

What if two persons are responsible for debt?

A sample of last will and testament with a section about debt payment.

In most mortgage cases, couples usually apply together. In this case, the surviving spouse or loan co-signer will be responsible for paying the debts. However, the probate court considers several factors before determining that the living partner should be paying for the joint debts. In some cases, selling the estate is enough to repay all the deceased’s outstanding debts, while in others, loan providers may settle on an amount lesser than the original debt.

 

A loved one’s death isn’t only emotionally turbulent, but it often also brings complicated financial and legal issues with it. An experienced and reliable probate attorney Queens or probate attorney Brooklyn can help you through each step of the process, from contesting and probating the will to removing an executor or administrator, ensuring complete protection of your rights.

If you’re looking for an experienced probate attorney in Brooklyn, Queens, Manhattan, or other NYC areas, get in touch with the law office of Ledwidge & Associates, P.C. today!

Estate planning tips for business owners

Putting an effective estate plan into place is a prudent step for any New York resident to take, but it may be even more important for those who own a business. Probate courts are not the places where most entrepreneurs would want questions about their estate resolved, and probate judges may sometimes not be as knowledgeable as they could be about complex intangible business assets such as intellectual property.

Placing business interests in a living trust is one way that the probate process can be avoided to an extent. However, this can be complex if the business was structured as a partnership or limited liability company. Business real estate can be handled in a number of ways, and a transfer on death deed, a life estate or a joint ownership arrangement may all be appropriate strategies.

Some assets that are personally held may be related to a business, and proactive steps should be taken to make sure that these assets do not become entangled in probate proceedings. Having contingency plans in place within a company can also go a long way towards ensuring that things continue to run smoothly. An individual should be designated in advance to take care of the running of the business and procedures can be established to ensure that cash is available to run the business. However, perhaps the most important estate planning step entrepreneurs can take is having a plan in place to ensure that the business continues to operate after they pass away.

Dealing with end of life matters is seldom easy, but failing to take action can leave family members with difficult problems that could often have been avoided. An attorney with experience in this area could provide peace of mind by explaining how to the prudent use of trusts and other estate planning strategies can protect heirs and minimize the impact of estate taxes.