One of the questions I am asked most often is, “Do I have to pay my deceased loved one’s debts?” In Ohio, there are strict rules about the payment of a decedent’s debts.
Decedent’s Probate Estate
Rule No. 1: The only place from which a creditor of a decedent can be paid is from the decedent’s probate estate. There is a very limited exception to this which may apply to a surviving spouse, which I will not address here because in over 33 years of practice I have personally never seen this limited exception apply.
If a person dies and does not have a probate estate, the creditor is out of luck and has no place, no person, to look to from whom the creditor can seek payment. The creditor must write off the debt. I tell my clients it is easy to thwart the claims of creditors at death by making sure the client does not leave a probate estate by making sure all assets have beneficiary designations, are in a trust, or are owned by another person as joint tenants with right of survivorship. I have written and posted several blogs on that topic.
Ohio Probate Statute
Rule No. 2: If there is a probate estate, the creditor must file a “claim” within six (6) months of the date of death. Accordingly, if the family wants to frustrate creditors, wait for more than six (6) months after the loved one’s death before filing the Estate. Do not feel bad for creditors—there is a statute that permits a creditor to open an estate for the purpose of presenting a claim against the estate.
However, the Ohio statute is generous about what constitutes a “claim”—in general, if the executor/administrator receives a bill within six months of the date of death, that is sufficient as a claim. The lawyer representing the estate should be consulted for more specific information.
More Debts Than Assets
What happens if there are more debts than assets? The Ohio probate code contains an “insolvency” proceeding, which sets out a priority of order in which debts and costs of administering the estate are to be paid. That subject is beyond the scope of this short blog, and again the lawyer representing the estate should be consulted if this is an issue.
If you have questions about this or other estate planning matters, make an appointment to see our Cortland estate planning lawyer.