The Ultimate Debt after Death Quiz

Staff

4 Min Quiz

Image: refer to hsw

About This Quiz

Debt 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 good news is that you are solely responsible for your own debt and it generally cannot be transferred to someone else when you die.

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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.

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What is the first expense that is settled from your estate after you die?

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.

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What is second expense that is settled from your estate after you die?

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.

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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?

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.

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Common property laws mean _____________________________.

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.

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What happens to the debt on your home if a family members assumes the property after you die?

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.

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Which of the following is safe from being reclaimed for debt repayment after you die?

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.

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If you have significant accumulated debt, what should you do before writing your will?

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.

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What happens to your co-signed debt when the co-signer dies?

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.

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