When a loved one passes away, most heirs are concerned about what will happen to their outstanding debt.
Is it forgiven? Does it come out of the estate? Are family members responsible?
The answers to these questions, as with so many aspects of law, are complex but here is a basic look at what you, your will, and your trust lawyer might see.
Let’s start with the mortgage. An outstanding mortgage usually comes along with the house when it is inherited. Banks might work with the heir, but payments are expected. If the mortgage is worth more than the home, the bank may allow a “short sale” for less than what is owed, and may even waive the deficiency for the heir.
Tax debt may also be due following the passing of a loved one. There are usually taxes involved with the property left behind that take the highest priority of all the debts.
Things get a little dicey when we start talking about medical debt, so we’d definitely recommend working with an experienced will and trust lawyer to help minimize these outstanding expenses. The state could even place a lien on your house in the event of Medicaid debt, so it’s important to know your facts and get legal help.
Credit Card Debt
As far as credit cards are concerned, as long as you aren’t a co-signer, you aren’t personally responsible for them. The credit card companies can contact the executor of the estate for payment but there is a limited time in which to do so.
Get Help For Peace of Mind
While some debts must be paid from the estate, others can haunt family members. Furthermore, if the estate pays for the debt, there is less for your loved ones to inherit. A good estate lawyer can help you deal with debts properly when the time comes, or help a person proactively plan to ease worry for their loved ones.
For assistance dealing with the debts of an estate, we invite you to contact Barber Financial Group’s Legal Services by giving us a call at 913-393-1000 or requesting an appointment with the form below.
Source: Garrett Griffin, BFG Legal Services, 1-19-16
Investment advisory services offered through Barber Financial Group, Inc., an SEC Registered Investment Adviser.
The views expressed represent the opinion of Barber Financial Group an SEC Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Barber Financial Group does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.