Can heirs be liable for co-signed loans that they had no part in or does the liability “go away” in probate if there’s no claim by the lender?

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Can heirs be liable for co-signed loans that they had no part in or does the liability “go away” in probate if there’s no claim by the lender?

My senile grandmother co-signed a student loan for my cousin. Because he lived in a community property state, my grandfather therefore unwittingly became a co-signer. Grandpa has since died. The loan (as far as I know) is current. As my grandfather’s sole heir, could I be held liable for this loan if my cousin does not pay later on, or does Sallie Mae lose their rights to collect if they do nothing during probate?

Asked on January 16, 2012 under Estate Planning, Washington

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Heirs of an estate are not personally liable for any loans that were co-signed by the decedent for some person. Rather, the estate of the decedent would be responsible for any loan  that was co-signed by the decedent.

In the situation that you are writing about, if there is a probate with respect to your grandfather's estate and "Sallie Mae" is advised of the probate and fails to make a claim as a creditor, then it would be barred from going after the estate's assets for payment on the loan.

From what you have written, most likely "Salle Mae" will not make a claim as to the estate since payments on the loan is current from what you have written.


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