My elderly mother passed away last week and has depleted her life savings for caregiver expenses over the last 2 years . She has about $ 2 , 000 left in all accounts . She has one Visa account with an $ 11 , 000 balance ( due to UN - reimbursed medical equipment , drug expenses ) and another Master card account with a $ 9 , 000 balance ( also due to medical expenses ) . She had a living trust and my sister is the Trustee . She owned her own home ( title was in the Trust ) but had a reverse mortgage on it ( no cash out , it just extinguished the forward mtg ) and there is little equity in it . My brother is going to inherit it and refinance the loan into a forward mortgage in his own name . Who , if anyone , is responsible for the 2 credit card debts ? The estate does not have the $ to pay them .
When the estate has no assets, typically, the creditors are out of luck. They will write off the debt, get a tax break, and pass on the costs to the rest of us.
I am very sorry for your loss. I would suggest that you explain the situation to the creditors and hopefully, they will simply give up.
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You need to bring the documentation of the debts and your Mother's assets plus the trust to a probate/estate planning attorney to determine what the trust states regarding payment of debts and how much equity is left in the house. I agree with my colleague that you need to notify creditors of your Mother's death but excess equity in the house may have to be applied against the debt. Additionally, you need to notify the California Dept of Health Care Svcs to see if they have a medical claim against the assets including home equity. You do not have an obligation to pay your Mother's debts but her estate does and her trust may. If you or a family member takes assets without paying the creditors they may have a claim against you for what you took. Your brother should proceed very carefully in taking possession of the house without considering the equity versus debts. The other issue is whether the house is titled in the trust by a deed or there is a pour over will or it is in the trust by a reference in the trust. Depending on how it is titled it may require a court order to convey title to your brother. I don't want to be negative but, as you state, your mother passed with legal debts.
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General Practice Lawyer
If it was a revocable trust of a now deceased settlor, the trust also has obligations to settle the debts. The trustee has to make sure that creditorsare notified in much the same manner as under will administration. Many creditors only file against estates and ont file on trusts but they have that right. I recommend having your sister work through this correctly especially if savings are in the trust. As well as the house.
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