Craig's Corner - Wealth Planning Insights

Friday, August 14, 2015

What Happens When Someone Dies With Major Outstanding Debts?

My parents recently took out another mortgage on their home. What happens if this debt remains after they pass away? 

Contrary to popular belief, most debts do not die with the debtor. Creditors have a window of time to make a claim against the debtor’s estate, which must be honored by the executor and paid in full before beneficiaries can receive their inheritance. As an executor, it is vital to understand the breadth of estate administration laws as they pertain to payment of debts; otherwise, significant personal liability could ensue. As a testator, there are several options to consider when planning for the payment of debts upon your death. A competent estate administration and planning attorney can help guide you in the best direction given your unique circumstances and the particulars of your financial portfolio. 
Handling debts at death

Under Nevada Revised Statutes Section 147.040, a creditor has just 90 days to file a claim against an estate for payment of debts. This 90-day period begins either on the date the executor publishes public notice of death in a local newspaper, or upon the date the death notice is mailed directly to the creditor. 

If the creditor’s claim is for more than $250.00, it must be accompanied by an affidavit stating the amount due, and confirming that all payments already made have been credited to the account, and that there are no offsets available to help reduce the outstanding loan balance. If, as is the case in the example above, the debt is related to a mortgage or lien, the creditor must attach a certified copy of the mortgage or lien to the affidavit. 

If the executor or personal representative does not believe the debt is valid, he or she may reject the claim. The creditor has 30 days to file an action in court; otherwise, the debt is considered permanently waived. 

If you are named executor or personal representative of a Nevada estate, please do not hesitate to contact the estate planning attorneys at the Stone Law Offices today for assistance: (877) 800-3424. 

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S. Craig Stone II of Stone Law Offices, Ltd. serves clients throughout Clark County, Southern NV, Las Vegas, Henderson, Boulder City, North Las Vegas, Summerlin, Carson City, Reno, Washoe County, and Nye County. Also serving clients with asset protection nationwide.

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