Sometimes, when a loved one passes away in Colorado and they leave debts and unsettled financial affairs in their estate, it causes unexpected complications for their family members. Debts do not just disappear when a loved one dies. Depending on the creditors involved and the type of debts the deceased left behind, any outstanding obligations can offset their estate.
People who do not handle their financial obligations while they are alive often leave behind a mess for their loved ones to straighten out. According to Quicken Loans, the ones who suffer the most are the family members because dealing with debts from an estate can be a huge source of frustrations and headaches. The law mandates how assets that are left behind are to be used to satisfy any outstanding financial obligations upon one’s death. Before anyone can receive their inheritance, all creditors must be satisfied. However, creditors are not able to go after certain assets, like life insurance, 401ks and certain types of investment accounts.
According to The Balance, if a person dies without any estate plan or will, their estate has to go through probate court. However, when there are debts and unsettled obligations left behind the heirs at law and beneficiaries are the ones that may suffer the most.
Matters involving debts and estates can become very complicated depending on the assets, estate and debts that are left behind. Careful financial and estate planning can help to minimize those complications and protect the inheritance of future generations.