You may have assumed the role of being the financial provider and handler for your family. So it may be difficult for you to imagine a situation where you are no longer around to take care of them financially and they are left to fend for themselves. But your nightmare can turn into a reality, so we urge you to plan ahead. Namely, you must understand what happens to your outstanding debts when you die, and then work on rectifying them when you still have the opportunity to during your lifetime. That said, please continue reading to learn whether your family will be responsible for paying off your outstanding debts when you die and how an experienced Putnam County estate planning attorney at the Law Office of Andres D. Gil, PLLC can help you avoid causing them any undue stress in the future.

Does my family have to pay my outstanding debts when I die?

You may rest easier knowing that, usually, your family will not be single-handedly responsible for paying off your outstanding debts when you die. That is, the appointed executor of your estate is sooner charged with collecting your remaining money and property and using them to pay the rest of what is owed to your creditors. Then, your family may inherit what is left of your money and property as promised.

What’s more, even if there is not enough money and property in your estate to cover your debts, your family may still not be responsible for paying them off. Rather, your estate may be considered insolvent and your creditors may not be paid in full, if they receive anything at all.

It is worth mentioning, though, that there are exceptions to this ruling. For example, one of your family members may be a joint account holder with you. With this, they may have to pay back the negative balance you made on your joint account, from an overwithdrawal or otherwise. Secondly, one of your family members may have cosigned a loan with you; this is typically seen as a spouse cosigning on a mortgage loan. Therefore, your surviving spouse must continue to make monthly mortgage payments themself.

How can I avoid placing this undue burden on my family?

You likely do not want your family members who are your joint account holders or cosigners to be heavily burdened with your outstanding debts upon your unfortunate passing. This is why we recommend you take the following initiatives to reduce these debts as much as possible on your own, while you are still alive:

  • Prioritize paying off your outstanding debts with high interest rates, especially credit card debts that you use a joint bank account to pay off.
  • Consider applying for a debt consolidation plan, where you may consolidate your multiple debts into a single loan with a lower interest rate.
  • Create a reasonable monthly budget, which may significantly reduce your spending to allocate more funds for your debt payments.

As someone crafting an estate plan while experiencing debt, there is nobody better you can turn to than a skilled Putnam County estate planning attorney from our firm. So please, call us at the Law Office of Andres D. Gil, PLLC as soon as possible.