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The Inheritance of Debt


Mortgages, credit cards, and student loans. Although baby boomers would love to leave a nice inheritance to their children and grandchildren, they are often faced with a myriad of debts that sometimes leave them with less than zero when they pass. Sometimes they only leave debt!


Married couples: Generally, both spouses of a married couple are on a mortgage, and the remaining spouse will just continue to pay on the home in order to stay in the home. It is important to note that Florida has several laws concerning an individual’s homestead, the right to devise that homestead, and creditors of the decedent.

Heirs or Other Family Members: Under Florida law, an heir who inherits real property also takes the mortgage on the property. The estate will not pay off the mortgage unless the Will indicates it must be paid off and there are enough funds available in the estate to do so. If an heir or other family member would like to keep the home, they will either have to continue making the payments or refinance the loan. However, a loan modification can be difficult to obtain. Luckily for the heir or other family member, the Consumer Financial Protection Bureau has rules to prevent the loan balance from being “accelerated” due to the loan borrower’s death.

Credit Cards

Married couples: If the spouse was a joint account holder or if you live in a community property state and the debt was incurred during the marriage, the spouse will be responsible for the balance of the credit card.

Heirs or Other Family Members: Heirs and other family members will not be personally liable for a decedent’s credit card debt unless they have co-signed the loan. The Estate: If there are available funds, credit card debts may have to be paid out of the decedent’s estate.

Student Loans

Federal Student Loans: Upon the death of the student borrower, federal student loans can generally be canceled. Because federal student loans do not require a co-signer, this in not usually an issue.

Private Loans: Private loans generally do require a co-signer. Upon the death of the student borrower, the individual who co-signed for the loan will still be responsible for the loan. However, Parent PLUS loans are typically canceled upon the borrower’s death.