When someone dies in Mississippi, the property that they owned becomes the property of their estate. They may have selected certain family members or charitable organizations to receive their assets. Unfortunately, their financial obligations also pass to their estate.
People may have had massive student loans, large credit card balances or medical debt from their end-of-life care that becomes a responsibility of their estate. What happens if there aren’t enough assets in the estate to pay those debts in full?
The personal representative must proceed with caution
The party handling estate administration is at risk of financial liability for debts in some cases. Unusually, the personal representative should communicate with creditors and make a point of paying them with whatever assets remain in the estate.
If someone dies while owing a debt and they have a cosigner for that debt, the cosigner may be the responsible party for any remaining balance due after their death if the estate cannot settle the account. The personal representative is typically not responsible for debts owed by the decedent if there are not sufficient assets in the estate to repay those debts.
They may need to liquidate estate property to pay debts to the best of their ability. If they make mistakes in that process, they could then become personally responsible for the remaining debt. If someone improperly distributes estate assets to beneficiaries or pays creditors in the wrong order of priority, they might face that lead to personal financial responsibility.
It is, therefore, crucial for those managing an estate with significant debt to learn more about Mississippi law and follow the right procedures during estate administration. Properly handling debts, including sending formal notice to creditors, can help mitigate the personal financial liability risk that comes with engaging in estate administration.