Practical Experience And Legal Knowledge Guiding You

Will my debts die with me?

On Behalf of | Apr 9, 2023 | PROBATE & ESTATE ADMINISTRATION - Estate Administration

Many people have debts when they create their estate plans. Many will still have debts when they die.

If you have debts, will they expire when you do — or will your heirs have to pay them? Here’s what you need to know:

It depends on the specific debts

Federal student loans are one of the few debts that will die when you do. Most others will probably still need to be paid. That can happen in a few different ways:

  • Is there a co-signatory on the debts? Examples could include your mortgage or debt on a joint credit card. If your partner wants to keep the house, they’ll need to keep paying the monthly payments. If they can’t do that, then they’ll need to sell the property to pay off the outstanding amount. Joint credit card debt would become your partner’s responsibility to pay. The only exception might be if they can show a court how the spending was nothing to do with them. But it would have to be an extreme case, such as you racked up a series of payments while enjoying a vacation with a secret lover.
  • Is there money in the estate to pay other debts? As part of probate, your executor needs to inform anyone you still owe money to of your death. Those creditors can then lodge a claim for repayment. The executor needs to arrange payments from the assets contained in your estate. Only then can whatever is left be distributed to your beneficiaries.

As with many legal things, there can be exceptions to the general rules, so it’s wise to get legal help to learn more.