One of the more common concerns involving wills and estates in Louisiana is whether beneficiaries could end up paying for debt. Although the answer to this question would be determined by the details of your case, it is not very likely that your heirs would have to take on your debts on your behalf.
As explained on Debt.org, almost three-quarters of Americans are expected to pass away owing money to somebody. The article states that nearly 70% of people have credit card balances, and some — 6% of the population — are carrying student loan obligations. Please continue reading for a brief discussion of debt as it pertains to settling an estate.
One of the first things you should know is that your assets become an estate when you pass away. The Louisiana succession process is designed to transfer those assets to various other parties, such as your heirs or your creditors.
Succession also may handle the debt you accrue during your lifetime. The most common scenario is that your estate would pay your creditors, and the remaining funds would go to your beneficiaries. While this may reduce the amount of money your loved ones inherit, it would not make them responsible for paying anything that the estate was unable to pay by itself.
There are, of course, several exceptions to this — and you can reasonably expect your creditors to explore every avenue available to get their money back. One common situation involves co-signers, who could be responsible for settling your debts out of their own personal assets. Creditors could also independently contact your beneficiaries in some cases, so it could be wise to include all interested parties in your planning conversations if you expect to have some debt in your estate.
The best way to determine how your financial obligations might affect your estate would be to have a personalized assessment of your situation. There are many variables, so please do not view this as legal advice. It is only intended to provide background information.