Can Bills Be Passed on to Relatives?
Many people hope to leave some type of inheritance to their loved ones when they pass away, but many end up leaving a load of debt instead. If you are in debt, you may be concerned about leaving bills and debt to your loved ones. In most cases, the bills will not be passed on to your heirs.
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Responsibility for Debt
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When you have a debt such as a credit card debt or medical bill, you cannot pass it on to a loved one. The only person who is responsible for a debt is the person who opened the account. For example, the person whose name is on the credit card account is the only one who can be pursued for the debt in the future. When that person passes away, the debt can be forgiven by the creditor.
Debt in Probate
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When an individual passes away, his estate will go through the probate process. During probate, the executor of the estate addresses all of the debt from the estate. The creditors of the estate submit claims on the assets. The executor collects all of the claims and then pays the bills in order of importance, according to the probate laws in the state. Once the resources of the estate are exhausted, the remaining creditors must forgive the debt.
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Joint Ownership
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One situation in which a bill could pass on to an heir is if the individual owned the property jointly with the person who died. For example, if a loved one had a car loan with you jointly, that person would take over the payments once you pass away. The co-owner of the property applied for the loan with you and is responsible for it if you are no longer around to make payments.
Assuming the Debt
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In some cases, a family member may wish to assume a debt and take it over. For example, if your children do not want to allow the family home to be taken in foreclosure, they may try to assume the mortgage. Depending on the lender and the type of mortgage, the children may be able to assume the loan and just keep making the payments until it is paid off. Otherwise, the lender will foreclose on the house.
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