Page 30 - Southern Exposure- April '24

Page 30, Southern Exposure

EldEr EStAtE plANNiNg

Collecting Debts On Behalf Of Your Deceased Loved One

Submitted by Anné Desormier-Cartwright, Esq..

People often engage in any amounts outstanding, that is, amounts that were due if you are the successor trustee, we can help you administer
transactions that result in at the date of death. For example, consider a situation in your loved one’s trust.
money being owed to them, which Bob made a loan of $5,000 to his friend Julie, who One of the important duties of a PR is to collect, protect,
such as loaning money to a was obligated under the loan agreement to make monthly and prepare an inventory of all the assets in the deceased
friend or business partner repayments of $250 on the 15th of each month until the loan person’s estate, including the debts owed to them, so they
or renting a house to a was repaid in full in December 2024. If Bob passes away can be distributed to the beneficiaries of the estate. Trustees
tenant. But what happens if on Jan. 16, 2024, the PR would need to determine if Julie similarly have a duty to maintain records relevant to and to
someone passes away before was current on her payments, collect any monthly payments collect debts owed to the deceased person’s trust. Seeking
they receive the money owed she owed at the date of Bob’s death (including interest), and help from an experienced estate planning attorney can help
to them? Can someone else monitor future payments. put your mind at ease by helping ensure that you fulfill all
collect these debts? If your Once the PR or trustee is aware of a debt that is owed your duties during what is likely a stressful and emotional
loved one has died and you to the deceased person’s estate, they must provide a formal time following the death of your loved one. If you would
think they were owed money at the time of their death, keep written notice to the debtor that the deceased person has like help, call us today to set up an appointment.
the following information in mind. passed away and the date of death, that the estate is their If you have questions about this or your estate plan and
Does The Debt Die With The Person? new creditor, and that future payments should be made what documents are necessary schedule a free consultation
The fact that someone dies does not mean that the to the estate via the PR or trustee. The notice should also today by calling our office at (561) 694-7827, Anné
outstanding debt owed to them disappears or is no longer include the PR or trustee’s name, address, and any other Desormier-Cartwright, Esq., Elder and Estate Planning
owed. The debt survives the death of the creditor and is then information needed to facilitate payment of the debt. The Attorneys PA, 480 Maplewood Drive, Suite 3, Jupiter, FL
owed to the deceased creditor’s estate. In fact, a debt that is PR or trustee should make efforts to collect any past due 33458.
owed to the estate is considered an asset (i.e., money and amounts and to facilitate the payment of amounts that will The content of this article is general and should not be
property) of the estate. The estate is entitled to collect the be due in the future, for example, rental payments for the relied upon without review of your specific circumstances by
debt as part of the probate process that culminates in the remaining term of a lease agreement that extends beyond competent legal counsel. Reliance on the information herein
distribution of the deceased person’s money and property to the date of death. is at your own risk, as it expresses no opinion by the firm
the beneficiaries named in their will or to the beneficiaries What If The Debtor Will Not Pay The Amount Due? on your specific circumstances or legal needs. An attorney
designated by state law if the deceased person did not Although a PR or trustee will initially attempt to collect a client relationship is not created through the information
have a will. Similarly, if the debt is owed to the deceased debt by contacting the debtor and requesting payment of the provided herein.
person’s trust, the trust’s right and obligation to collect the amount due, if those collection efforts are not successful, ask To comply with the U.S. Treasury regulations, we must
debt continues after the trustmaker’s death. the attorney representing the PR to send a demand letter to inform you that (i) any U.S. federal tax advice contained
Who Can Collect The Debt? the debtor or file a lawsuit on behalf of the estate to collect in this newsletter was not intended or written to be used,
Before anyone can act on behalf of a deceased person’s the amount owed. If there is no PR, but there is a trust, the and cannot be used, by any person for the purpose of
estate, they must be appointed by the probate court. If the trustee should consider hiring an attorney to represent them. avoiding U.S. federal tax penalties that may be imposed
deceased person had a will, they probably named someone We Can Help on such person and (ii) each taxpayer should seek advice
they trusted to act as their personal representative (also If your loved one has passed away, we can help guide you from their tax advisor based on the taxpayer’s particular
known as an executor). If the deceased person did not sign through the probate process if you are the PR of their will circumstances.
a will, a person who is given priority in Florida’s probate or wish to be appointed as the PR of their estate. Likewise,
law, generally a family member, can petition the court to
name them as the personal representative of the estate to
administer the estate. Once appointed, the administrator of
the estate is authorized—and has a duty—to act on behalf of
the estate to collect the debt. Similarly, if a debt was owed
to a deceased person’s trust, the successor trustee has the
obligation to try to collect the amount owed to the trust.
How Can A Personal Representative Or Trustee Discover
If The Deceased Person Was Owed Money?
If the personal representative (PR) or trustee is the
deceased person’s spouse, they may be very familiar with
the assets owned by their deceased spouse, including how
much money their spouse was owed and who owed it, but a
non-spouse executor or trustee may be less knowledgeable
about the assets owned by the deceased person. All PRs or
trustees should examine the deceased person’s important
papers and financial records to determine if there is any
evidence that money was owed to the deceased. Optimally,
there will be a written loan agreement, mortgage document,
or other contract that provides clear evidence of both the
existence of debt and the terms of repayment. However,
even if there is no formal contract, other written evidence—
for example, an email or even a text message demonstrating
that someone owed money to the deceased person—can
be used to establish the existence and terms of the debt.
Alternatively, if the deceased person had records, books,
or canceled checks showing the existence of a debt and
that someone was making regular payments to them, this
documentation can be used as evidence for the PR or
trustee to establish the existence of a debt. Although written
evidence is considered more reliable, the trustee or PR may
also rely on witnesses who heard the deceased person and
the debtor discussing a loan or other business transaction
to establish the existence and terms of the obligation.
Similarly, debtors themselves may make statements to the
trustee or PR acknowledging the debt.
What Happens After The Debt Is Discovered?
The PR or trustee who discovers that a debt was owed
to the deceased person should first ascertain if there are
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