When our clients meet with us for estate planning, a common question we receive is: what happens to my debt when I die?
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Debt does not go away upon death, but what happens to it can change depending on several factors.
While you do not owe money after death, your estate may owe money.
An estate is determined to be insolvent if the debts exceed the value of the assets. In this case, creditors may not be repaid all that they are owed and remaining debt will be forgiven. The family does not receive any inheritance.
Life insurance policies, retirement accounts and trusts are often outside of the reach of creditors.
However, creditors may be entitled to payment from the estate.
Creditors must take the necessary steps to obtain payment from an estate. There is a priority among the creditors of the estate.
If the debt is solely in the name of the deceased person, family members will not be responsible for that debt.
Repayment of debt can be complicated and depends on the nature of the debt, the priority of the creditor, and the assets of the estate.
Creditors must be notified when an estate is going through probate.
If you are the personal representative or a trustee, contact an attorney for help with debt.
We help our clients through the process. Also, if you would like to know more about your debt, contact us today.
Contact us today to help you get the right documents in place or to update your current estate plan. We will plan so that you don’t have to worry about your future.
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