In today’s economic climate, it is likely that you will still have some outstanding debt when you pass away. This is yet another reason why making an estate plan can be vital to your successors’ financial well-being, even if you do not have considerable assets. 

According to NerdWallet, knowing which of your debts might pass on to whom may at least allow for planning so you can protect them as much as possible. 

Is debt considered community property? 

Washington is a spousal community property state. This generally means that you and your spouse share responsibility for any debt incurred during your marriage, even if not explicitly named on the account. 

However, any outstanding debt that you acquired before the marriage does not automatically pass on to your spouse. Still, after your death, half of any community assets may go to satisfy your individual liabilities. 

Which debts must my estate pay? 

If you are single and absent a co-signer, the following debts become the responsibility of your estate: 

  • Credit card balances 
  • Private student loans 
  • Mortgage loans 
  • Auto loans 

Although probate must address your unsecured credit card and student debts, once the estate assets are gone, the creditors and lenders must absorb any lingering balance. With mortgages and car loans, your fiduciary has a choice to continue making payments from your estate or sell the asset. Additionally, the inheritor of your house or car can continue making the payments. 

How can I protect my loved ones? 

Once you have outlined which of your debts are likely to become the responsibility of your surviving family members, there are steps you can take to protect them. Usually, creditors cannot touch life insurance payments or retirement savings. A standard solution is to secure enough life insurance to cover any outstanding debts and name the responsible parties as beneficiaries.