When people in Georgia think about estate planning, they typically only consider the assets and property they have and how they want to pass those inheritances to heirs and loved ones. But what becomes of a person’s debt following his or her passing? Will all debts have to be paid back, and will beneficiaries and surviving loved ones have to foot the bill? Outstanding debts will be paid in accordance with priorities set by state and federal laws, but the good news is that surviving family members probably won’t have to pay back the debts, at least not out of their own pockets.
Dying with debt
According to a 2016 study by Experian, around 73% of people pass away while having some form of debt, either from credit cards, mortgages, car loans, lines of credit or a combination of several accounts. The study also documented that these debts can be significant, totaling tens of thousands of dollars or more. When it comes time to settling an estate, lenders will be looking to recover the debts owed to them, and sometimes, assets and property of the estate must be liquidated to pay off creditors.
The good news is that surviving family members, regardless of their relationship to the decedent, will not have to pay back the estate owner’s debts unless they were co-signers on the loan. The money to pay the debts will come from the estate’s assets, and as mentioned, sometimes, property and assets will have to be sold to acquire enough funds. However, if the decedent owed more than his or her estate can cover, the process will effectively deplete the estate funds, leaving no inheritance for heirs and beneficiaries.
Seek legal counsel when administering an estate
Whether a person is the executor of an estate or a surviving family member waiting on an inheritance, the process is typically long and complex that can take months or longer to complete. Since there is so much to account for and so many intricacies involved with the process, a person in Georgia will do well to work with an estate planning attorney from the start. Doing so will help ensure the estate is administered properly and all debts are paid back.