What happens to your debts after you die?

A person's financial obligations are not automatically forgiven once they've died. According to the Consumer Financial Protection Bureau, in most cases, any unpaid debts are

covered by the person's estate — the total assets owned at death. If the individual appointed a personal representative, executor or administrator, he or she is responsible for paying

any debts from the estate, including medical debt. Debts must be settled before heirs receive any money. If there is no will, a judge will decide how the assets should be distributed, and

will appoint an administrator to carry out those decisions. Also, consider your insurance needs. Are you planning to self-fund your long-term care, or should you buy insurance? How will your

funeral expenses be covered? “Insurance planning can be buy time for grieving loved ones with debts to pay,” says Greg Giardino, a Certified Financial Planner (CFP) at J.M. Franklin &

Co., LLC, in Tarrytown, New York. “When life insurance proceeds are paid out, they usually sit in a safe, liquid account. The beneficiary is provided with a checkbook to use to make

withdrawals against the account as needed.” 3. KEEP YOUR ESTATE PLAN CURRENT Your personal representative or executor will be responsible for paying your debts, including medical bills, from

those assets. If the debt is in the decedent’s name, the decedent’s estate will be responsible, says Rachael K. Pirner, Esq, a lawyer in Wichita, Kansas, and a fellow of the American

College of Trust and Estate Counsel. There are exceptions, however, so Pirner recommends leaving instructions for your representative to consult a probate lawyer before making any payments.

Legal fees can be paid by the estate. “Most state bar associations have a lawyer referral service, which is a good place to start,” Pirner says. Obtaining legal advice may be wise for other

reasons. “Parents are responsible for the deceased minor children’s ‘necessaries’ and spouses for the deceased spouse’s ‘necessaries,’” Pirner says. In other words, goods or services

required for sustenance or support of that person. A lawyer can define them for you. In addition, if you cosigned for a loan, your estate will be responsible. Similarly, if you are a joint

account holder on a credit card you will be responsible for any balances on the card. To be clear, a joint account holder is different from an “authorized user,” who is not usually

responsible for the amount owed. Creditors, of course, also have their rights, says Hewitt. “They can file claims in probate [i.e., the legal process of establishing the validity of a will]

and can sue any of your heirs if they try to bypass the probate process.” 4. CONSIDER STATE LAW