Published on David Sklar & Associates | Blog
By Richard Sklar, October 25th, 2023
Will Your Beneficiaries Inherit Your Debt?
Like most people, you may be concerned that your debts could place severe financial hardship on your loved ones after you pass away. Will your family inherit your outstanding debts? Who’s responsible for paying them off? Can creditors still legally pursue you or your beneficiaries for payment? What steps can you take to minimize the financial burden for your family?
Although, in most cases, your loved ones won’t inherit your debts when you die, there are exceptions where they may be liable, such as joint debts. Also, if you’ve racked up considerable debt over the years, it could be enough to wipe out your estate’s assets, leaving nothing for your beneficiaries.
Here are a few safeguards you can put in place so you don’t leave your family battling debt collectors and struggling financially to get by.
In Canada, we’re fortunate that debts don’t transfer to surviving family members through a deceased person’s estate. If your debts are solely in your name, your executor will pay them through your estate and distribute the leftover assets to your beneficiaries. Still, your unpaid debts can lead to a stressful situation for your family. Depending on your circumstances, you risk leaving behind many co-signed loans and joint debts they will be liable for.
Richard Sklar, Licensed Insolvency Trustee, David Sklar & Associates
