Help with Family, Finances

and the Future

Beware of passing debt to heirs and beneficiaries

On Behalf of | Apr 1, 2012 | Heirs & Beneficiaries |

When New Jersey consumers work with an attorney to plan an estate, they must think about the future as well as any unforeseen events. It can sometimes feel like a “what-if” strategic game. That said, it is important to plan for the unknown and when that occurs to feel comfortable with what we are leaving behind for our loved ones.

Consumers must make decisions such as which assets to pass on to heirs and beneficiaries. Once they have planned their estate, many things can and will change. For example, the housing market collapse caused many consumers, including seniors, to lose much of the value that was tied up in their homes. Changes in an estate’s financial health could affect its heirs and beneficiaries.

A person can die and leave assets that are actually not holding the value they once were. Additionally, the estate can have remaining financial obligations such as credit card or medical debts for the executor of the estate to settle.

Not to mention, reports now state that it is not uncommon for homes to be worth less than the actual mortgage.

For the heir or beneficiary, it is wise to ask an estate attorney how the estate’s debts will impact him or her financially. The laws in each state vary regarding how much debt can be passed along to heirs, such as children or spouses.

Generally speaking, most debts die with the debtor. However, there are exceptions. If a debt, like a loan or credit card is shared jointly, the surviving signor is still responsible for that debt. This not only includes a surviving spouse, but also any adult child who co-signed for their parent.

Source:, “Who inherits your debt?” Shelly K. Schwartz, March 27, 2012