Probate Question: Am I responsible for my half sister’s debts after she passed away?
By: Mark L. Dodds, Esq., Partner at Grant Morris Dodds
Question: Am I responsible for my half sister’s debts after she passed away?
Question Detail: My father is trying to get me to renounce my rights in favor of him regarding a half sister I have not seen in twenty years; he says I will be responsible for her debts if I do not sign the papers. Is this a fact? Am I responsible for someone else’s debts since she has passed away?
Answer: The fact that your father is trying to scare you into giving him an interest in your half-sister’s estate suggests to me that there must be some reason why he wants to get control of this estate, that reason most likely being that the value of her estate exceeds the debts of her estate. There is no reasonable scenario that I can think of where it may be possible that your father is trying to do you a favor; instead, it is likely he is trying to scare you into giving up a valuable inheritance.
In the first place, a person’s death cannot cause you to ever be liable for the debts of the one who died unless you were already a co-signer with the decedent on a debt. Furthermore, your act of accepting or rejecting your rights in the decedent’s estate will have absolutely no effect on your liability for any such debts. Since you have not seen your half-sister for 20 years, it is virtually certain that you are not a co-debtor on any of her debts, so you will incur no risk of liability in refusing to release your interest in her estate. And if it should be that the value of her estate is sufficient to cover any of your half-sister’s debts, then you will be entitled to your share of the estate after those debts are paid.
There are occasions where an estate is opened to pursue a claim, such as where the person was killed in an automobile accident and the estate is opened to seek a recovery for the wrongful death. However, most such claims are made through an attorney who has accepted the matter on a contingency basis, meaning that you pay the attorney a fee only if the attorney is successful in obtaining a payment on the claim, either from the person responsible for the wrongful death and/or his insurance company. In such a case, it may be necessary for you to pay a few filing fees and other court costs, but your decision on whether or not to pay any such costs can always be made after the estate has been opened and the attorney has requested that you chip in your share of the costs. If at that time you decide it is not worth it, you can always drop out and release your claim to any such settlement. But these are decisions that should be made only after you have found out what the facts are concerning your half-sister’s estate.
Another potential problem is that if you renounce your rights in the estate and transfer those rights to your father, the IRS could make the case that you have made a gift to your father. The proper way to renounce an interest in any estate is to sign a “Qualified Disclaimer”. There are certain formal requirements to accomplish a disclaimer, two important requirements being that the disclaimer must be formally signed within nine months of your half-sister’s death and another being that you cannot designate who gets your share of the estate upon making the disclaimer. It is possible that a disclaimer could result in your father getting the portion you have disclaimed, but if you have to assign the interest to him because it would not otherwise pass to him, then if there is value in the estate, you most certainly will not have made a qualified disclaimer and you will have made a gift which could have gift and estate tax consequences to you.
In any event, you had better put your father on your list of people to be wary of.