Death and debts: what survivors can expect





The sour economy. Living beyond one’s means. Reckless spending. Unexpected expenses. There are many ways that people can find themselves in debt, sometimes owing more than their estate is worth. What happens when an individual in one of these difficult situations passes away before paying off their debts?

If you are concerned about leaving behind a mountain of debt for your beneficiaries, or if you’re concerned about being saddled with unexpected debts after a loved one passes away, then take heart – you may not have much to worry about.

Estate planning and debt: Knowing what to expect

It’s a good idea when putting your estate plan together to figure out exactly what assets you have and how much debt you carry. You might find that you owe more than you own, and while this is a concern for you it may not be as big an issue for your heirs.

The bottom line is that debts pass on to the estate when an individual passes away. This means that when you die, your assets will be tallied and your debts will be paid from your assets until there is no more money. If there is money left over, it will be distributed according to your will.

Here is a quick summary of a few major debt concerns:

  • Home loans and car loans: if a loan is no longer being paid by “somebody” after an individual passes away, the lender has the right to repossess the property. Beneficiaries are under no personal obligation to continue to make payments, however the property may be taken by the lender to pay the debt.
  • Credit card balances: again, heirs are under no obligation to pay a deceased person’s debts – unless they were a co-signer. Credit card companies and other creditors can place a lien against the estate and ask to be paid before assets are distributed, but if there is no money in the estate then the companies are out of luck.
  • Hospital bills: same here – the hospital wants to be paid, but unless you are a spouse of the deceased you are under no legal obligation to pay up. Again, the hospital may want the estate of the deceased to pay the bill, but survivors won’t have to foot the bill.

You get the idea – unless you are a spouse or unless you cosigned a loan, heirs are under no legal obligation to pay another person’s debts, no matter what pushy creditors may tell you. Finally, you may feel a moral obligation to pay up, but that is a different matter.

If you are a Pennsylvania resident and need assistance with your estate planning, asset protection, living trust, or special needs trust then please Shields and Boris can help. To talk with an experienced estate planning attorney, please contact our law office today..

Elder Law Offices of Shields and Boris

109 VIP Drive

Suite 200

Wexford, PA 15090

Toll Free: (888) 444-4093

Phone: (724) 934-5044


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Elder Law Offices of Shields and Boris
109 VIP Drive
Suite 102
Wexford, PA 15090
Phone: (724) 934-5044
Toll Free: (800) 879-0984

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