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Do Your Relatives Have to Pay Your Debts when You Die?

Archer Law April 29, 2021

When someone dies, there are a lot of things that their loved ones have to manage — and most people want to shield their heirs from unnecessary stress.

One major source of confusion tends to center around who is actually liable for a deceased loved one’s debt. Unscrupulous debt collectors will often try to bully a deceased person’s relatives into paying a debt they don’t have to pay by misleading them about their responsibilities.

When Is Someone Really Responsible for A Deceased Person’s Debt?

It’s true that money in your estate may have to be used to settle some of your debts when you die — but your heirs are unlikely to be personally responsible for any of those debts out of their own pockets. Your debts don’t automatically become someone else’s debts when you pass away. There are very limited circumstances in which a family member would be responsible to pay for the debt. These include:

  • They’re a joint account holder on the credit card or loan (not merely an authorized user)

  • They co-signed a loan with you that isn’t fully repaid

  • They’re your spouse and the specific debt is shared under state law

Even in these situations, the debts may not always need to be repaid, so your heirs would be wise to seek some experienced guidance before they decide how to proceed.

What Else Can You Do to Protect Your Estate from Being Depleted by Debt?

Many people opt to create estate plans that shield their assets in irrevocable trusts (since those can’t be touched by creditors). This, coupled with other components of a good estate plan, makes it possible to transfer your wealth to the next generation without worry. An attorney can help you learn more about your options.