When you pass away, your family must address any outstanding debts that you have at the time of your passing. If you do not leave instructions in your will, your assets will simply be sold to address these debts. Anything left over will be distributed to your family based on the laws in California.

If you create a will (and you should!), you can specifically set out who should pay your debts and how you would like them to be paid. You might want to dictate how certain debts are addressed under a couple of relatively common circumstances. We provide a few examples that you might want to consider below.

You have secured debt on real estate.

When you pass a piece of real estate on to a beneficiary, that beneficiary takes the property subject to any debt owed on it.

For example, imagine that you want to pass your family home on to your child. One of two things will happen at the time of your death related to mortgage.

• The mortgage company will require immediate payment of all of the amount owed at your passing. If your lender takes this type of action, your child will have to get a loan to cover the debt, or they will have to sell the property to pay the debt.
• The mortgage company will ask your beneficiary to take over the loan payments. Someone will have to pay the debts on this home, and your loved one may be able to simply step into your shoes and take over the mortgage after you pass.

If you want to dictate whether your child keeps the home, it may be a good idea to set out exactly how you would like the mortgage debt to be handled.

You want to make distributions among several beneficiaries so they are somewhat even.

Imagine, for instance, that you have several children. You want to give a large, undivided asset to one child, but you want to be sure that all of the children end up with assets with the same overall value. You can give one child both the large asset and dictate that the child also takes on some debt that the other children would not have to pay. In this way, you keep the debt from the other children and even out your overall giving plan.

Getting Help with Your Will in California

Creating a plan that addresses your debts and works for your family can be tricky. It can be done effectively with the right help. Contact our team at the Law Office of Charles Stark for assistance in distributing both assets and debt as part of your will.