When a loved one passes away, there are a lot of tasks to complete. And that’s in addition to dealing with the grief and loss you’re experiencing. One common question among surviving family members is whether debt is forgiven after death, and if not, who is responsible for it?
In general, the majority of debts are not forgiven at death. The estate of the deceased person will be responsible for paying off any unpaid debt. The executor of the decedent’s will or the administrator of his or her estate is responsible for making sure that the owed amounts are paid in full.
If a debt is not paid, a creditor can file a claim in probate court. If there is no will, a judge will oversee asset distribution and appoint an administrator. State law can also affect some parts of the process.
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Simplifying Debt Repayment After Death
If you have debt in any amount, it’s important to take proactive action to ensure that your loved ones aren’t left with a significant burden, either financially or logistically. This is important regardless of your age or health status.
Make Information Readily Available
Keep records of all accounts, account numbers, creditors and debt amounts. Make login and contact information available and accessible.
Buy Life Insurance to Repay Debt
If your estate doesn’t have sufficient assets to pay off your debt, consider taking out a life insurance policy in (at least) the amount that you owe. Additionally, having a life insurance policy in place is an ideal way to financially protect the people that matter to you. Visit our life insurance page to learn more about the different types of life insurance, and which may be right for you.
It can be difficult to figure out which life insurance plan is right for you. Working with an insurance broker can help you cut through the noise and find a plan that meets your needs. Schedule a one-on-one meeting with one of our insurance brokers to get your questions answered!
We offer a variety of life insurance and Medicare information meetings as webinars each month. To join a meeting check out our event calendar and take charge of your insurance decision process. If you have any questions about signing into a Zoom webinar, please contact us for support.
Source: AARP, “What Happens to Your Debts After You Die?”