Most people have debt of some kind, and often have questions about what happens to their debt if they die, particularly if they die without a will. It is natural to not want to pass on the burden of your debt to their surviving family members or loved ones.

The simplest way to avoid this is to draft a will specifying exactly how certain debts should be paid, because Kentucky law states that all debts must be settled before any remaining assets are distributed.

Who settles the debts?

In the event of your death, a personal representative is appointed to handle your estate distribution. The personal representative is either an executor or an administrator. The naming of an executor is a requirement for a valid will in Kentucky. An administrator is appointed by a court for Kentucky residents who die without a will.

It is important to note that a person who owed money to you may still serve as the executor of your estate. Both administrators and executors are tasked with managing all aspects of the estate, including taking care of the debts.

If you die without a will, your estate will go into probate. From there, any creditors will have 6 months from the date of the appointment of your personal representative to make a claim against your estate to collect their debt. This period is extended out to 2 years if there is no administrator appointed.

Creditors must file their claims in writing to either the personal representative or the clerk of probate court. If filed with probate court, it is necessary that the personal representative receive a copy of any claim for it to be considered valid and made part of the debt settlement process.

Which debts are paid first?

Once all creditors have filed their claims, debts are paid according to their priority, with certain creditors being named preferred creditors. Generally, funeral expenses and the costs of settling the estate are paid first, followed by tax debt. The remaining debt is paid after that.

If you are concerned about what will happen to your debt in the event of your death, there are helpful resources available. Speaking with an attorney who could help you develop a solid estate plan specifying the disposition of your debt could help provide you with peace of mind.