Ok i have a question..
My mother passed away in Feb, she had a tremendous amount of medical bills and no insurance. So im guessing that my dad is liable for them. But what happens when he dies? What happens to all of there debt? Credit cards, house, medical bills? How do those get paid? Do they sell the home and pay off thier debt? My mothers medical bills are outrageously more than what the home is worth! Anyone know what happens? I heard someone say that the heirs would be responsible, but surely not.
Anyone have a clue?
Death and Debt
Ok i have a question..
When your dad passes, the state will take property in the value of the debt (house, assets, etc.) the rest will then be left to you and any bros or sisses you may have.
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Death And Debt - Keeping Your Family Safe
Keeping out of debt is an important thing, and confining yourself to a superb financial plan, one including budgeting and retirement planning, is a great way to ensure that your finances are solid. But if there is one thing that many of us forget, even the best debt fighters among us, and it is something we all face. That thing is death. None of us are immune to it. Which is why it is critical that you plan ahead, and ensure that your family doesn't have to experience financial losses, particularly as they are experiencing the grief of your loss.
Debt and Inheritance
Having a lot of debt, whether credit card debt or secured debt such as mortgages, can be harmful to your heirs. The fact is, when you die, your estate's assets are first used to pay for both probate and funeral costs. This is a must. Secondly, your remaining assets will be used to pay off your creditors. Once all of your debts are paid, your assets are typically transferred to your family members. In cases where you have secured debt with an asset attached, the debt on those assets may be inherited. A prime example of this is if you willed a $250,000 house to an heir with a $100,000 mortgage attached to it, the debt would have to be assumed by the heir. The heir can in fact sell the property to pay off the debt, and often whether this can be done or not will be decided by the will's executor. If, however, the total asset value is lower than the amount of debt, the creditors will lose out. There is no way that your family will have to deal with your debt above your asset values.
Exceptions To The Rule
Certainly, there are cases wherein a person does have to assume a deceased person once the person has passed on. In a case where the person has co-signed a loan for the deceased person, that person will have to assume the obligations of the loan, despite the intended payer's death. Another point where debt may have to be paid is in the case of joint accounts, which many husbands and wives hold.
The fact is, a lot of debts will go with you to your grave, particularly if you have very few actual assets. But, on the other hand, they can still be a huge problem for your family. An auction may need to be held to generate cash to pay down debts, and this can be a horrible thing for your family. Family possessions may have to be sold, which could make an already tough situation all but devastating. Reason enough, we think, to ensure your debts are paid now, as opposed to later.