People built estates, bank balances are piled, assets are saved, business empires are erected and family names are made popular. Those who succeed in doing so are called Magnets. The degree of richness achieved varies from person to person. These riches are than transferred to generations, in some cases it increases and in some cases it decreases depending on how it is handled. The founder of these empires is the only one who feels the pinch if it decreases and remains happy if it increases. Many of these die and are never able to know as to happen to his riches after his death. Many, who die, leave behind liabilities or debts to be faced by the dear ones.
Do you need to plan for your debts after your death? An important question, answered by very few, the only reason is that no one likes to think of his death and there after for his dear ones. It is extremely important to plan as to what will be the course of action for your debts or for your assets in case you die. You heirs should not be running from post to pillar to either clear your debts or to get their shares of your assets. What happens to your liabilities and assets once you die should be known to you in your life.
You may leave a will or not all your assets will immediately be liable to be proved as a legal share for your heirs, in case of a will it has to be proved as legal. All your liabilities/debts are cleared from your assets, if the assets are unable to clear all the debts the remaining all liabilities are forgiven. The relatives or the heirs do not suffer any burden of clearing them, except in case of you having a partner equally responsible for the debts, and then it becomes his /her responsibility to clear all the debts.
In case you are a resident of a Community Property States, the law differs. In these few states if you or your spouse takes a loan or is in debt and any one of you dies the other partner becomes responsible to pay back all debts weather you or your spouse is a partner/ cosignatory or not. The Community Property States are Arizona, California, Idaho, Louisiana, New Mexico Texas, Washington and Wisconsin.
It is fairly clear that in case of your death all or any of your liabilities/debts are paid back from your “estate”. In other word all your bank balance, your property and other assets are piled up as your “estate” and is used to pay back your debts. Remember the estate does not include your Insurance policy, Pension plan and 401k plans. These policies and plan are meant for you heirs only, the remaining all assets can be sold to pay back debts.