![]() ![]() ![]() "Debt that couldn't have been avoided during the marriage - like medical expenses or a mortgage - generally becomes the responsibility of the surviving spouse in community property states," said CFP Bill Simonet, principal advisor at Simonet Financial Group in Kyle, Texas. Generally, those states view both assets and certain debt that accumulated during the marriage as equally owned by each spouse - meaning a surviving spouse could be responsible for paying back the debt, even if it was only in the decedent's name. However, a handful of states have "community property" laws, which make debt at death a bit more complex. In fact, a person could pass away with an insolvent estate - that is, one lacking the means to pay off its liabilities - and yet have passed on assets that didn't go through probate and generally can't be touched by creditors. More from Personal Finance: Here are the top 10 cities for summer staycations $600 unemployment benefit will likely end July 31 How to financially prepare in for an emergency Additionally, assets placed in certain types of trusts also pass on outside of probate, as does jointly owned property (e.g., a house) as long as it is titled properly. However, he added, not all of a person's assets necessarily are counted as part of an estate for probate purposes.įor instance, with life insurance policies and qualified retirement accounts (e.g., a 401(k) or individual retirement account), those assets go directly to the person named as the beneficiary and are not subject to probate. "In most states, funeral expenses take priority, then the cost of administering the estate, then taxes and then most states include hospital and medical bills," Mignogna said. One way to check this is by noting how long (and how much money) it takes you to pay all of your bills without a credit card. Personal Loans for 670 Credit Score or LowerĮach state also has its own set of rules for prioritizing debt that should be paid from the estate, said Steven Mignogna, a fellow with the American College of Trust and Estate Counsel. When there is no estate If there is no money or property left in an estate, or the estate can’t pay, then the debt generally will not be paid. Personal Loans for 580 Credit Score or Lower When someone dies with an unpaid debt, if the debt needs to be paid, it should be paid from any money or property they left behind according to state law. Best Debt Consolidation Loans for Bad Credit ![]()
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