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What happens to a person's debt if they die?

As you can imagine, most deaths are exactly "planned." People don't know when they are going to die, and even if they plan for the end and die of old age -- i.e. if they have an estate plan and are medically declining to the point that death seems apparent -- there can still be some elements to their estate or life that cause confusion during the estate planning process.

Case in point: a person's debts. Even though they may try to handle them all before passing away, there can still be debts that exist upon death. And, of course, if a person dies suddenly, it is unlikely that all of their debts will be cleared out during their lifetime.

 

So what happens to a person's debt when they die? How is it treated in the estate administration process? In most cases, the debt's die with the person, or they are handled through the person's estate. It is unlikely that a deceased person's family would be responsible for a debt upon that individual's death.

However, if a family member has a stake in the debt, then they would certainly have responsibility for it. Another wrinkle in the "debts dying with the individual" situation is if you live in a community property state (Colorado is not one of these states) and you carry credit card debt with you into death. If your husband or wife were to die with credit card debt to their name, and you lived in a community property state, you would probably share that debt, or at least have a stake in part of the debt.

Source: FindLaw, "Debts After Death," Accessed Dec. 7, 2015

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