If you have recently lost a loved one and they died with significant amounts of debt, you may be feeling worried and concerned about how these debts will be dealt with. You may fear that you will inherit these debts in the same way as you would inherit assets.
The truth is that debts are not treated in the same way as assets after a person has passed away. While you as the deceased person’s relative will not be responsible for paying off these debts, you may still have to make some difficult decisions in regard to managing your loved one’s estate. The following is an overview of how debts are managed after death.
When Would I Be Responsible for Paying Debts of A Deceased Relative?
The only situation in which you would be responsible for paying off a debt is when you owned any part of the debt at the time of your loved one’s death.
How Are Credit Card Debts Dealt with After a Person’s Death?
All credit card debts belong to the person who is named on the card. Therefore, you will never be responsible for the credit card debts of a deceased loved one unless you jointly held the credit card in question.
How Is a Mortgage Dealt with After a Person’s Death?
Similarly, a mortgage loan will always belong to the borrower named on the loan. If the loan was jointly held by a surviving spouse, they will have the choice to sell the home to pay off the loan or to keep making the repayments.
If you are concerned about the debts of a deceased loved one, it’s important that you understand exactly how probate law applies to the situation.