Dying with Debt - Who takes care of it?
How is debt handled when someone passes away? Are the children stuck with the unsecured and secured debt? Dying with debt is not a simple subject since most states handle this differently, but a general rule is that an children, cousins or other family outside a marriage will not be liable for this debt. In most states, the spouse will not be liable for their partner's un-secured debt, but there are some community property states that see the husband and wife as one.
Dying with Debt
When we die an entity arises which is known as our "Estate". This estate represents our net worth or our "assets and liabilities". When we die a process called probate begins which is where the court steps in and tries to manage our debts and assets. Most of the time this includes laying out the pecking order of who gets paid first once assets are sold.
While some think that they should receive the inheritance of their family before they begin paying off the debt, this is not how it works. It is interesting how during the probate process good and bad spending habits are brought forth. Most of the time the probate process will pay debts like funeral expenses, medical bills, and taxes first before paying off unsecured debt (credit cards, credit lines).
Purpose of Life Insurance
One of the best features of life insurance is that if you have a policy in place, you can cover the expenses of one dying with debt. So if you know that your secured and unsecured debt is roughly $150,000. You should have a life insurance policy of at least $150,000 so that your debt will be covered and loved ones will not have to deal with the probate process for your lack of planning.
Monitor Life Insurance offers a final expense policy that was built to cover final expenses up to $35,000. These final expense insurance policies handle burial costs, medical expenses or other expenses that need to be paid. These insurance policies pay very quickly and will alleviate financial stress that the family may be dealing with at the time of death.
For more information on Monitor Life Insurance Company's final expense policies please contact 1-877-759-5760.
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