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Dealing with Your Unfinished Contracts After You Die

By Lane V. Erickson, Idaho Estate Planning Attorney

We live in a time when life can be complex. This is true even if a person doesn’t own any businesses or have unusual investments or ownership of extraordinary kinds or types of property or assets. Even regular people are likely going to have mortgages, car loans, student loans, and other bills like utilities or credit cards. Additionally, most regular people now use online banking or other electronic options that are available to them for their finances and for the contracts and bills that they are obligated on. When we assist individuals with their estate planning, we often talk about these kinds of things and explain to our clients what happens with each of these types of things after they die.

Our premier Idaho estate planning attorneys have assisted clients for over 70 years in creating customized estate plans and in helping families and other individuals through the probate process after their loved one has passed away. One of the biggest things that we assist our clients with is dealing with contracts that are left unfinished by the person who has passed away. In other words, we help families and loved ones deal with all the basic things in life that usually exists. Our goal is to help our clients take care of and resolve all of these unfinished contracts in a way that brings closure and finality to those that are left behind.

If you have had a family member or a loved one in Idaho who has passed away recently and you have questions or concerns about the contracts that exist and what needs to be done, we can help. Below is a short summary of three things but you should know in dealing with the unfinished contracts that might exist after your loved one has passed away.

What Types of Contracts Could There Be?

The place to start is to determine what types of contracts there could be. These usually include things such as a mortgage or car loans. It could also include student loans and credit card bills. Additionally, there could be business agreements that exists as well as investments. Finally, you may also need to deal with selling property of the estate after a loved one passes away.

Each of the type of contracts that are stated above are unique in how they are handled after an individual passes away. One of the basic steps required to be completed in the probate process is to identify any creditors that may exist and two resolve any claims that could be made against the estate based on debts that were owed by the decedent before they passed away. There may also be some unique laws that apply to some of these types of debts as well.

For instance, if the decedent owed student loans that were federally financed, the decedent’s death may cause those student loan debts to be forgiven. This is usually not true of student loans that were privately funded or of loans that were consolidated, even if they were originally federally financed. The key is to review a copy of the student loan contract and any amendments or changes that occurred while the student loans were being paid back. The language in these documents will help you know what happens to these student loans when the borrower passes away. This leads us to the next topic.

Presumption About Contract Survival

The second thing that you should understand is that in most instances there is a presumption in the law that a contract will survive the death of the person obligated by the contract. In other words, other than some specific exceptions such as the student loans mentioned above, almost all contracts and the obligations created by them will continue even after the person creating the contract has passed away. In other words, death usually does not end the contract or the obligations created by it.

Let’s take a mortgage or a car loan as an example. If a person stated in their last will and testament that they were giving their home or their car to their spouse or to a child or some other individual, but there was a loan associated with that asset, the person inheriting that asset would also inherit the remaining obligation owed on that asset, if they chose to keep the asset. In other words, if a decedent gave their car to a child but there was a car loan that remained unpaid, the child would be obligated to take over the payment obligations if they wanted to keep the car. They could either pay the loan off in full, or they could work with the lender to simply take over the car payments and continue making them the same as the decedent did before they died. As stated above, in this instance, the death of the decedent does not change the loan obligation it may just change who is obligated to make the payments on that loan.

The Personal Representative’s Role with the Decedent’s Contracts

The next most important thing for you to understand is the role of the personal representative in dealing with the decedent’s contracts. Until a personal representative is appointed, there is no person who has any legal authority to deal with any of the contracts that existed with the decedent. In other words, using the car loan example mentioned above, the company holding the car loan is not obligated to communicate with any person until the personal representative is appointed. When that occurs, the personal representative has legal authority to communicate with and deal with any of the contracts that the decedent is obligated under.

Additionally, if the personal representative transfers an asset to another individual such as the car being transferred to a child after a parent’s death, the person receiving the asset now has authority to deal directly with the company holding the car loan.

Dealing with contracts and the obligations that come with it after a loved one has passed away can sometimes be difficult and complex. We understand this. We also understand that you are not an expert in knowing how these things work. We have helped numerous clients work through these situations and we are confident that we can help you too!

Enlist an Idaho Estate Planning Attorney to Help You

Our team of Idaho lawyers can help you with any of your estate planning or probate needs. Whether you are seeking to create or review an estate plan for yourself or would like to help a loved one, we are available to discuss your options and answer your questions at an initial free 30-minute consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a free consultation. You can also email us directly at lane@racineolson.com or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho Estate Planning problems.

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