When You Die, Who Pays Your Debt? Why the Answer Can Be Confusing

Key Takeaways When someone dies, their estate pays outstanding debt. If debts exceed assets, the estate is considered insolvent. Assets with named beneficiaries, like 401(k)s, usually bypass the estate and pass directly to heirs. Heirs may still be responsible for debt they shared, co-signed, or held jointly, including some situations involving spouses. No one wants to worry that they will saddle their relatives with debt after passing away, and yet there is a great deal of confusion about what ac ...