About This QuizDebt in old age can be a stressful and anxiety-provoking situation, especially if you are concerned that your debt will be transferred to your loved ones after you die. It is essential that you become familiar with the generalities and specifics of the laws that govern debt after death. Take this quiz and find out more about what happens to your debt after you die.
What happens to your debt when you die?
The debt is transferred to your next of kin.
Typically, debt is forgiven when you die.
The good news is that you are solely responsible for your own debt and it generally cannot be transferred to someone else when you die.
The debt is forgiven, but the credit rating of your next of kin is tarnished.
In the United States, what government dictates the laws of debt after death?
In America, the laws of debt after death are determined by the individual states. This means the laws concerning debt after death are fairly inconsistent across the country.
What is the first expense that is settled from your estate after you die?
credit card debt
There is an order to how expenses are settled after you die. Funeral costs are paid out of your estate before anything else is settled.
What is second expense that is settled from your estate after you die?
credit card debt
Following funeral and lawyer costs, your family is entitled to receive a certain amount of inheritance before debt settlement is considered. The maximum allowed family allowance depends on individual state laws.
Let's say you have more debt than your estate can cover. What happens to that lovely family heirloom you promised your daughter after you die?
All debt is forgiven and your daughter receives the heirloom.
Your daughter must pay the value of the heirloom to the debt collectors.
Since the heirloom is written in the will, it is repossessed to pay off your debt.
Here comes the bad news. If your family heirloom is bequeathed in your will, it can be repossessed to pay off your debt. Unfortunately, your daughter will never receive the heirloom.
Common property laws mean _____________________________.
Any property acquired after you get married is shared between you and your spouse.
In several states in America common property laws dictate that spouses share any property that is acquired after marriage. This means that your spouse is responsible for any “common” debt after you die.
Any property acquired before you get married becomes shared with your spouse.
both of the above
What happens to the debt on your home if a family members assumes the property after you die?
All mortgage debt would be forgiven.
Your family member would be responsible for paying this debt.
either of the above
It really depends on how much you still owe. If the amount is negligible, your bank may forgive this debt. In most cases, however, your family member will assume responsibility of continued mortgage payments after you die, provided they don't sell the property.
Which of the following is safe from being reclaimed for debt repayment after you die?
both of the above
The good news is that money from life insurance policies, pension plans and 401Ks is not included in your estate. In other words, this money cannot be used for repaying your debt after you die.
If you have significant accumulated debt, what should you do before writing your will?
Try paying off as much of the debt as you can.
Become familiar with state law regarding debt after death.
Before you do anything, become familiar with state law regarding debt after death. Each state has slightly different laws and you may be able to protect your investments and heirlooms by knowing the intricacies of your particular state law.
Distribute all family heirlooms to avoid putting them in your will.
What happens to your co-signed debt when the co-signer dies?
All debt is forgiven.
The debt becomes your sole responsibility.
When you co-sign a loan, both parties assume full responsibility for repayment. This means if your co-signer dies, you are now solely responsible for paying back the loan.
Your debt is cut in half.