To follow my previous post on what happens to your individual debts when you die, this post will speak to joint debts and debts that are guaranteed by a third party (parent or spouse, most likely).
Joint debts, and those guaranteed by a third party, will survive you. Since there is a second party obligated to the debt, your death will not impact the life of that debt, as long as the co-signer or guarantor has not predeceased you. This can be a substantial change in circumstances for your guarantor. If you’ve been making your student loan payments each month since you graduated college (or law school) and your parents (for example) have to all-of-the-sudden pick up that debt service immediately after your death, that can be a serious strain on cashflow.
What’s worse, some student loan companies are treating the death of the borrower as a default on the note and calling the full remaining value of the note immediately. All other debts that are held jointly, the joint credit card, for example, will continue on unchanged.
Proper Estate Planning can protect your assets from your creditors (again, to be continued).
Paul Yokabitus is the CEO and Managing Partner of Cary Estate Planning, a Cary, NC, estate planning law firm. With years of experience in estate and elder law, he has zealously represented clients in various legal matters, including estate planning, guardianship, Medicaid planning, estate administration, and other cases.
Paul received his Juris Doctor from the Campbell University School of Law and is a North Carolina Bar Association member. He has received numerous accolades for his work, including being named among the “Best Attorney in Cary” in 2016 and 2017 by Cary News and Rising Star in 2020-2023 by Super Lawyers.