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When a loved one passes away, it’s not just the emotional loss that weighs on you. The financial questions can also be overwhelming. With the rising costs of healthcare and the financial struggles many families face today, it’s common to wonder: “Am I going to inherit debt instead of money?”
The good news is that, in most cases, you won’t have to use your own money to pay off your loved one’s debts. In this blog, we’ll walk through how debt is handled after someone passes and what you, as an heir, need to know.
The Estate, Not the Heirs, Pays Most Debts
When someone dies, their debts don’t disappear—but they don’t transfer directly to you either. Instead, their estate—the money, property, and other assets they owned—is used to pay off what they owed.
Here’s how it works:
- Creditors can submit claims against the estate during the probate process.
- The personal representative (also called an executor) is responsible for paying valid debts from estate assets.
- Most unsecured debts—like credit cards, medical bills, and personal loans—are paid only if the estate has enough money.
- If there isn’t enough to go around, some debts simply go unpaid or are settled for less.
Aggressive debt collectors sometimes try to convince heirs they’re responsible for paying these bills, but unless your name is legally tied to the debt, you aren’t required to cover it.
Don’t Rush to Pay Bills: Let the Process Work
After a death, your first instinct might be to start paying off bills to get everything settled. But that can cause problems later. In Minnesota, the estate must follow a legal order for how debts are paid. Some bills, like funeral costs and taxes, take priority over others.
Before making any payments, the personal representative needs to:
- Identify and value all assets.
- Notify known creditors.
- Wait for creditor claims to come in before distributing funds.
If you pay a credit card bill too soon, the estate might come up short on more pressing expenses. We recommend holding off on any payments until you’ve spoken with a probate attorney. We’ll help you avoid missteps and make sure things are handled in the right order.
When Are You Personally Responsible?
There are a few situations where you could be on the hook for a debt. These include:
- You co-signed a loan with the person who passed.
- You were a joint account holder (not just an authorized user).
- You received an asset directly, like a payable-on-death account, but the estate didn’t have enough money to pay creditors.
It’s also important to understand the difference between unsecured and secured debts. While unsecured debts don’t come with collateral, secured debts—like a mortgage or car loan—are tied to a specific asset. If those loans aren’t paid, the lender can take back the house or vehicle.
If you want to keep an inherited home or car that still has a loan, you’ll need to keep the payments current. That way, the property retains its value and avoids foreclosure or repossession.
Real Property and Family Conflict
Family homes often bring up emotional and financial concerns. We worked with four siblings who inherited their parents’ house. They all agreed to sell it to one brother and agreed on a price—but couldn’t agree on who should cover the mortgage while the title transfer was in progress. That one issue delayed the process and created unnecessary tension.
We can help your family sort through these issues ahead of time so everyone is on the same page and conflict is minimized.
Watch Out for Misleading Collection Calls
Some collection agencies may pressure you to pay a deceased loved one’s debts. They might say you’re morally obligated to take care of it or imply you’re legally responsible. If your name isn’t connected to the debt, you don’t have to pay. If you’re getting calls like this, we can step in, clarify your rights, and help stop the harassment.
How We Can Help
Managing a loved one’s estate is challenging enough without worrying about debt collectors or making the wrong payment. At Unique Estate Law, we help Minnesota families understand their options and make sound decisions. We’ll walk you through the process, explain what debts need to be paid, and protect your peace of mind.
Still Worried About Inheriting Debt? We Can Help
If you’re unsure whether you’re responsible for a loved one’s debts—or just want help sorting things out—contact Unique Estate Law today. We’re here to guide you with care, clarity, and confidence.