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Estate planning: settling debts for deceased Michiganders

When Michiganders think about their death, they likely hope that they will be able to leave their family with many assets. They likely intend to have their affairs in order so that their family does not have many financial issues to deal with. Michiganders hope that their assets can be quickly distributed to their loved ones without legal hassles. However, in reality, life is messier than this. Even with estate planning, there can be legal and financial issues that arise during the administration of an estate.

One issue is with a person's debt. In today's economy, it is not unusual that people die with some debt in their name. In these situations, the estate is responsible for paying the person's debt. The estate -- through the executor or administrator -- does this with the assets that it is left with after the person has died. Nonetheless, if the estate does not have enough assets to pay the debt, then the debt will remain unpaid.

Michigan residents should understand that they are under no obligation to pay debts that belonged to a deceased relative. In fact, people are under no obligation to even talk to debt collectors who are trying to collect a deceased person's debt. Under the Fair Debt Collection Practices Act, debt collectors are prohibited from harassing, abusing or using unfair collection practices to collect a debt.

When a debt collector for the debts of a deceased loved one contacts people, they should refer the debt collector to the estate's executor. The executor may need to speak with the collector in order to settle the estate.

There are ways to keep the assets of an estate out of the hands of creditors. An estate-planning attorney can help people understand these options and create a plan that works for their estate.

Source: FindLaw.com, "Paying the Debts of a Deceased Relative: Who Is Responsible?," accessed on June 14, 2015

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