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Ask A Trust Officer

Debt After Death

Dear Trust Officer:
“What happens to my debts when I die?”
Still Paying The Mortgage

Dear Still:
According to a recent study by Experion, some 73% of consumers have debts when they die, including mortgage debt.
Grandma and grandchild planting flowers

  • 68% have credit card debt;
  • 37% have mortgage debt;
  • 25% have car loans;
  • 12% have personal loans; and
  • 6% are still paying off student loans.

The average total debt at death for these consumers was $61,554.

However, that does not mean all these people died virtually bankrupt. The study does not include an assessment of how large the estates were. Most likely, a majority of the estates were large enough to retire the debts.

At your death, your debts pass to your estate, just as your assets do. Your executor will be responsible for paying off those debts. All debts and taxes must be paid before any inheritance is distributed to your heirs.

Some assets may have to be sold to raise the money, if there is not enough cash or life insurance proceeds in the estate to meet obligations; this could include the family home. If there is a mortgage on the house, the heirs may be able to take over the responsibility of paying the mortgage to avoid a forced sale.

If you should die without any assets at all, your debts die with you. But, let’s hope that’s not the case!

Do you have questions concerning wealth management? If so, send them over to Adam Cox, JD, MBA, and he’d be happy to help.

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