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Debts and estate planning in New Jersey

Many people in Moorestown carry some sort of debt, be it a mortgage, credit card debt or medical debt. So, when an individual who still owes money on debts passes away, that individual's loved ones may wonder, what happens to that debt? Will it be wiped away? Will they be responsible for repaying it? It is a situation that may cause the deceased's loved ones much stress during what is already a difficult period in their lives.

While the deceased's creditors may try to insist that the deceased's relatives pay back the debt, in actuality most of the time the deceased's relatives are not responsible for the deceased's debts, unless the debts were jointly owned by the deceased and the relative. Instead, the debts are paid back through the deceased's estate as part of estate administration. This will happen even if the deceased had a will.

First, let's consider balances left on the deceased's mortgage. If the deceased's spouse jointly owns the mortgage with the deceased, then the spouse will still be responsible for it after the joint owner passes away. A mortgage will not be forgiven in these situations. The surviving spouse has a choice between keeping the home and paying the mortgage, or selling it to pay off the mortgage.

Next, let's consider credit card debt. If the deceased had credit card debt on a card that was in the decedent's name only and was not co-signed by anyone else, that debt belonged solely to the deceased alone. There is an exception for married couples who reside in community property states. In these states, debts incurred while they are married may be considered to be jointly own debts, meaning the surviving spouse may still be responsible for the debts.

This is only a brief overview of how debts are handled after a debtor passes away, and cannot serve as legal advice. Instead, individuals who recently lost a loved one and have questions about the debts of the deceased may want to get more information about their particular situation.

Source: FindLaw, "Debts After Death," accessed June 20, 2016

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