Law Offices of Roshni T. Desai
Long-term Planning For Orange County
714-955-4137

Where your debt goes after you go

Once you have completed your will or made trusts for your loved ones, you might continue to worry if you have significant debt. Will your relatives be forced to pay off your credit cards or medical bills? What happens if there is not enough left after your creditors are repaid to give your loved ones a decent inheritance? At the Law Offices of Roshni T. Desai, we understand that these are valid concerns for you and other Californians.

As NerdWallet explains, you can rest assured that your relatives will generally not be stuck with your debt after you die. There are, however, some forms of debt that they will need to repay. For example, your spouse will be expected to continue making payments on the debt you both accrued during your marriage. If someone co-signed on a credit card or auto loan, this person would be responsible for the debt. The same goes for any outstanding mortgage, home equity loan or car loan when you leave these assets to a relative. This person may decide to continue making payments on the loan or sell the property to repay the debt.

After your death, your estate will be used to satisfy your creditors, and the rest will be distributed to your loved ones. You might consider getting a life insurance policy if you are worried there will not be enough of your estate left for your loved ones, since life insurance becomes the property of the beneficiaries and not your creditors.

It is a normal part of the probate process to liquidate one’s estate to repay creditors before the rest is given to beneficiaries. Our page on probate law can tell you more about why probate is not always bad, as well as how the process works.

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