If you’re like most people, you don’t enjoy contemplating your
own mortality. In fact, this is such a sensitive subject that a lot of
people, including high-net-worth individuals, never create an estate plan.
But have you ever wondered about your debt and what would happen to it
if you died? If you’re married, would your spouse be on the hook
for it? Could your family members inherit your debts as they would inherit
It’s common for Americans to have around $29,000 in debt and this
does not include their mortgage. The question is, do all of your financial
problems die when you do? As a matter of fact, it is possible for family
members to inherit a decedent’s debts, but it depends on the state
the person lives in and whether they have any assets in their estate.
Who is Liable for Your Debts After Your Death?
Generally, when someone dies, only debt that is in the decedent’s
name alone (this is key) is paid by the estate. A person’s “estate”
includes all of the assets he or she owned at the time of their death,
such as their home, their bank accounts, automobiles, RVs, artwork, collectibles,
personal possessions, and so on.
The executor or personal representative is the person who ensures all of
a decedent’s taxes and debts are paid and the remaining assets are
distributed to the beneficiaries. This process is called probate and is
overseen by the probate court.
Will your loved ones inherit your debts when you die? It depends if you
live in an equitable distribution or community property state. Florida
is an equitable distribution state, which means your surviving spouse is
not legally responsible for debts in your name alone after you die.
On the other hand, in community property states like California and Nevada,
the surviving spouse is legally responsible for any debts incurred by
their spouse during the marriage, whether they agreed to take on the debt or not.
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