Like many Florida residents, you have done your estate planning carefully, so your loved ones will have an inheritance to enjoy after you are gone. Also like many others, you may have a moderate to significant amount of debt. Naturally, you would not want your children to inherit your debt in addition to their inheritance. Will your family members be on the hook for your outstanding debt after your death?
There are a few different answers to this question, as NerdWallet points out. The important thing is to distinguish who the original owner of the debt was. If, for example, you had credit card debt before you were married, the debt should not pass on to your spouse or your children. On the other hand, your spouse would still be responsible for making the payments on a joint credit card. The person who inherits a property with an outstanding balance will be responsible for the payments or for liquidating the property to satisfy the debt. For example, if you leave your home to your eldest child, your child would need to continue paying the mortgage or sell the home.
If you breathe a sigh of relief knowing that nobody you have named in your will is a co-signer of a loan with you or will legally inherit your debt, there is one more point to consider. Before an inheritance is distributed to your loved ones, your estate will be used to repay debts. This can be a valid concern if you have significant debt – meaning there may be little inheritance left for your relatives after your creditors are paid. You might wish to consider buying a life insurance policy to ensure your loved ones receive an inheritance; however, this information should not be considered legal advice.