For Which Debts Will Your Estate Be Responsible?
After you pass away, your estate will still be responsible for settling some of your debts. Here’s a quick overview of what you can expect to happen to some of these common debts and which ones will take priority:
- Mortgage: Mortgage loans must be paid. In most cases, the beneficiary whom you named to receive the property will take your property subject to the debt on the property, but you can also instruct your executor to pay off the loan and leave the property to your beneficiary debt-free, if you wish to do so.
- Vehicle loans: Vehicle loans will also need to be paid from your estate, unless you want the person receiving the vehicle to also take is subject to the loan.
- Credit card debt: This is the most common type of debt left by people who pass away. The estate will typically need to pay these debts, and you can expect most credit card companies to assert themselves in their collection methods. However, if the estate doesn’t have much money, the creditor may write off some of the debts, especially if the state allows for beneficiaries to receive their assets before credit card companies.
- Leases: The terms of a lease will typically include information about what should happen in the event of the lessee’s death, so you should investigate your lease for this information.
- Business debts: Your estate’s liability for business debts primarily depends on the structure of business. A limited liability company (LLC), for example, may shield the business owner’s personal estate from liability, but a sole proprietorship does not.
- Child support: If you still owe back child support upon your death, the recipient parent can make a claim against your estate for the owed amount.
- Federal student loans: Some federal student loans will be discharged upon your death, but many student loans will not. You should review your student loan documentation very carefully to determine whether your estate will responsible for these loans on your debt.
- Medical expenses: Medical providers will typically make claims for payments from your estate for any owed medical bills.
For more information about debts you may need to settle through your estate, contact an experienced Tampa, FL estate planning lawyer at BaumannKangas Estate Law.