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What Happens to Your Debt When You Die?
You might think that death would absolve you from debt, but debt is not forgiven that easily. Generally, your estate is responsible. In fact, the party in charge of guiding an estate through the probate process has a legal duty to notify creditors and pay all valid debts. This means that debt usually must be paid from your estate before distributions can be made to your heirs or other named beneficiaries. The party settling your estate may have to sell assets, including real estate, to pay estate expenses and creditors. Debt is typically only forgotten if there is no money, property or assets left behind.
Wisconsin is also a community property state. This means that assets accumulated during a marriage are co-owned—but so are debts. Surviving spouses may be held responsible for any remaining debts.
What You Can Do
- Have a conversation with your loved ones. Let them know what your debt situation looks like, and make an effort to pay off balances.
- Consider having a professional fiduciary settle your estate.
- Protect your assets by getting life and disability coverage for your UW Credit Union loans. Ask us about this protection when you apply for a loan, or call us at 800-533-6773 to add the coverage later.
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