Guest Post: Creditor Claims in Decedent’s Estate: the State Can Make a Claim for What?

As part of a new series of posts, I’ve invited lawyers I know who practice other areas of law my clients and readers might find interesting or helpful to author guest posts I’ll publis here on my site. Our first guest post is authored by Ellen Williamson. Ellen focuses her law practice on estate planning, probate, and guardianship matters in Dallas and surrounding counties and enjoys helping clients plan ahead for their families’ future needs and assisting clients dealing with the loss or incapacity of a loved one. For more information, please visit Ellen’s website at ellenwilliamsonlaw.com.

What happens to a person’s assets and debts when they die? You may know that a person’s assets pass either to the beneficiaries of a will/trust/beneficiary designation or, in the absence of such planning, according to the will the state of Texas wrote for you. But what about debts?

Well, generally, a decedent’s debts become obligations of his estate. Some of the types of debt that comes up in probate estates won’t surprise you: secured debt (mortgage, car note), funeral expenses, estate administration expenses, general unsecured debt (credit cards, medical bills, etc.). And in some cases, if the decedent received Medicaid benefits during his life, the Medicaid Estate Recovery Program may make a claim for the value of care.

But did you know that if the decedent was incarcerated, the state of Texas can bring a claim against his estate for the cost of his confinement? Yes, that’s right: if you’re a guest at the gray bar hotel, in some circumstances, the state may pass the tab along to your estate.

There are a few important limitations on the state’s ability to bring such a claim. First, the state may not enforce a claim if the inmate was survived by a spouse, dependent, or disabled child. Second, and of note for estate planning, only the inmate’s probate estate is subject to such claims.

Just as a person anticipating future Medicaid need may wish to estate plan with the intent to minimize which assets pass subject to probate, similar planning may be appropriate when the client or a member of the client’s family is incarcerated.