Asume I have $20 000 in debt, and i die, do my children(asuming i have no SO) inherit my debt? If not who picks up the cheque.
Also can i leave my debt to someone in my will?
What country do you live in/are you a citizen of? Also, it’s “dying” fwiw.
Also probably depends on what kind of debt.
I am only familiar with the situation in Canada, but it is probably similar elsewhere. The debt would be owed by your estate. Your creditors would be able to go after other assets of your estate to settle the debt. These settlements would have to be made before assets could be distributed to your heirs. If your assets do not cover your debts, then the creditors will not get paid. They cannot go after the children or other heirs unless if they were involved in signing for the debt. That is part of the reason the cost of credit cards and other easy debt is so high.
Slight nitpick. Your estate will be divided up among your creditors. They will not receive the entire amount due them, and your heirs will receive nothing.
I can tell you how it works in the state of Maryland since I’m going through that right now.
My mother died a couple of weeks ago, very sudden. I being the eldest child, and no husband, have been made executor of the estate. That means that I get to do a whole lot of fun stuff including figuring out how much my mother was worth, and who gets paid.
I don’t have my papers in front of me, but in Maryland, the first people to get money is the Will Office, that money is very low, but for me it looks like it will be a few hundred dollars.
The next group to get money I can’t remember, and I don’t think I have to deal with them. The next would be the person who paid for the funeral. In this case it would be me, up to $5,000.
After that is taxes, if any. There are a few more that I don’t really remember, as it’s a lot to take in, especially when it’s so soon after the death. I do know that one of the last groups to get paid are the creditors.
Even with a will it’s not as easy as it sounds. I would have never thought that it would be so hard but I have to inventory everything and find values of it, then it can be decided how to pay for everything. I can also see where people get mad, because it’s happening, because no one is allowed to take anything before all of this is done. I’m already having problems with my mother’s family because they wanted things and tried to take them.
So if you have a ton of credit, it doesn’t mean that they get their money right away, or at all. I can’t wait for someone to call me personally and tell me I have to pay my mother’s debt.
Sorry to hear about your mother, Edward.
The priority list that you describe is fairly typical in the US, although there will be variances between the states. I don’t disagree with anything you say (having no knowledge of Maryland law), but I would add that heirs would come after creditors, even if creditors are low on the list.
In other words, I agree with Mikemike2, with kunilou’s clarification.
And remember that assets due to a beneficiary don’t go through the estate. Think “insurance.”