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Are beneficiaries liable for debts to creditors if the estate does not have sufficient funds?

Mar 20, 2020

Paul S. Labiner

Paul Labiner

Managing
Partner

Generally, no. By and large, beneficiaries should not have any liability to the deceased’s creditors simply because they are beneficiaries, unless:

  • the deceased gifted away their assets to someone shortly before dying, or
  • the deceased acted in concert with the beneficiary to defraud their creditors.

Even if the decedent’s estate lacks the funds to fully pay all outstanding creditor claims, heirs and beneficiaries are not personally obligated to pay the general debts of the deceased.

Of course, if the children or beneficiaries took any property or benefits from the deceased or the estate, or had assumed liability for care given the deceased, or guaranteed payment, they could be held liable for some or all of the deceased’s debts separately. This obligation to pay, however, is not based on their status as beneficiaries.

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