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Losing a loved one is an extremely difficult thing to go through. And while money is probably the last thing you want to think about as you grieve, it's important to understand how assets and debts left behind will impact you and others.

In most cases, an individual's debt isn't inherited by their spouse or family members. Instead, the deceased person's estate will typically settle their outstanding debts. In other words, the assets they held at the time of their death will go toward paying off what they owed when they passed.

However, if their estate can't cover it or if you jointly held the debt, it's possible to inherit debt. Laws on inheriting debt vary by state, and assets may be protected from creditors if certain measures have been taken, such as the creation of a living trust.

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While individual debts typically aren't the responsibility of those left behind, some types of debts may be inherited when someone dies. If your loved one passes away and their estate doesn't cover all of their outstanding debts, you could be responsible in these situations:

With other types of debt, it depends. For example, if your parent or spouse dies with medical debt, their estate's assets will go toward paying it off. If the debt exceeds the assets, the creditors may just write off the debt, meaning it doesn't have to be paid. But if you cosigned on medical bills or live in a community property state, you could be on the hook for their medical bills. Some states do have laws on the books that make adult children financially responsible for their parents if the parents can't afford to support themselves. These laws are not usually enforced in terms of medical debt, however, since Medicaid will often cover it.

Again, laws vary by state, so make sure to check the laws where you live or hire an attorney to help you understand your debt obligations.

What Kinds of Assets Are Protected From Creditors? Certain types of assets are generally protected from being claimed by creditors when your loved one passes. Even if your spouse or family member has outstanding debt, these assets are considered "non-probate assets" since they have a designated beneficiary or what's called joint tenancy with rights of survivorship. This means you can bypass the complicated probate court process and receive the asset directly, regardless of whether there's a will or not.

When you lose a loved one who had outstanding debts, debt collectors may come calling. They are allowed to contact a deceased person's spouse to identify the estate's executor or administrator. However, they aren't allowed to claim that you're responsible for paying off these debts unless you truly are legally obligated (like in the case of joint debt).

While they may believe they are acting within their rights, it's possible a debt collector will try to collect debt that isn't valid or has passed the statute of limitations. Make sure to familiarize yourself with debt collection laws and understand how to deal with debt collectors.

The Fair Debt Collection Practices Act (FDCPA) regulates what collectors can and can't do: They're not allowed to threaten you, harass you with repeated calls or claim they'll take your property they're not entitled to, among other things. If you believe a debt collector is violating your rights, you can send them a letter asking them to stop and report it to your state's attorney general or submit a complaint with the CFPB.

If debt collectors insist you're responsible for your loved one's outstanding debts and you're unsure how to proceed, consider hiring a lawyer. They can determine whether these claims are valid and help you deal with collectors. The CFPB advises looking for a lawyer who specializes in consumer law, estate or probate law, debt collection defense or the FDCPA. If you can't afford it, look for legal clinics or legal aid offices in your area that offer free or discounted services.

Make Sure Creditors and Credit Bureaus Are UpdatedThe executor of your loved one's estate (which may or may not be you) needs to send a copy of the death certificate to their creditors. Once notified of the passing, the creditors will likely pause collecting any unpaid bills as the estate is sorted out.

The creditors will also inform the credit bureaus of the death, which should prevent others from using the person's name to apply for new lines of credit. Even if you've contacted creditors, it's wise to also contact the credit bureaus (Experian, TransUnion and Equifax) directly to ensure they have updated the credit report to indicate the person has passed away. If you had any joint or cosigned accounts with your loved one, get a free copy of your credit report to ensure your accounts remain in good standing as you navigate this difficult process.

Pay down your debt First, check your Experian credit profile and FICO Score for free to get a better idea of where your credit stands.

Your personal assets have been better protected against unforeseen debts in an inheritance since 1 September 2016. Under the Heirs (Protection against Debt) Act, you only accept an inheritance outright if you sell goods you inherit or otherwise prevent creditors from having them. An exemption is available if you are faced with unexpected debts after accepting an inheritance outright.

If you accept an inheritance under benefit of inventory you are not liable for any debts, not even if you have enough assets to settle them. But you cannot dispose of the estate until it is certain that all the debts have been settled. Heirs under the age of 18 can accept an inheritance only under benefit of inventory.

If you decide to accept the inheritance under benefit of inventory or refuse it, you must submit a declaration to the district court. If you are not sure what you should do, seek the advice of a notary or other inheritance specialist.

Co-signed loans are generally the only kind of debt parents may be left with when a child dies. These may include student loans, car loans, or other personal loans. If the child was the primary borrower and they pass away, the co-signing parent may be required to repay the loan.

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Liquidating the assets of the estate and paying off all the bills will reduce or maybe even wipe out the money that survivors would have inherited, but that is the tradeoff for not having responsibility for debts after a death.

Credit card debt is unsecured debt and the responsibility of the estate unless you have co-signed the agreement or used it as part of joint debt agreement. It is near the bottom of the list of debts to be paid.

Next, you should know (or research), whether you shared responsibility for any debts with the deceased. Those debts could be secured, like a home or car loan, or unsecured, like a credit card, medical bills, or student loan.

If the executor of the estate is not sure about your responsibilities, contact a lawyer and ask for a consultation on the matter to determine whether you are legally bound by any of the debt and if you have any options for settling them.

Dealing with debt at any stage of life can be difficult, but it can be really tricky when a person dies and debt collectors swarm over the relatives trying to be the first in line to get paid by the estate.

The property and debts part of a divorce can be complicated, especially if you have anything of high value or a lot of debt. You may want to talk to a lawyer before you file or sign any property agreements. You can consult a lawyer just to help with the property and debts part of your case.

Assets that are non-exempt, meaning available to be liquidated and used to pay off debts, would include a house, car, boat, bank account, artwork, stamp or coin collection, or anything that has enough value to be sold.

Another problem can occur if beneficiaries of an estate fail to realize that they should pay old debts before accepting the money left. Financial experts suggest you post a notice encouraging creditors to contact you with old debts the estate may owe if you are the beneficiary of an estate.

The general rule of thumb is to go through an estate process with legal representation, carefully identifying any debts that must be paid and figuring out how much, if anything, will be left in the estate after all debts are satisfied.

Creditors searching for payment must present their request in writing during a prescribed time frame, which varies from state to state. In most states, the time limit ranges from 3-6 months for unsecured debts.

Nila Weaver fell in love. She gifted her entire soul to a man she believed was worthy. And in the process, she destroyed herself. Three debts paid, the fourth only days away. The Debt Inheritance has almost claimed another victim.

Despite this, there is also a growing shadow of adult Americans retiring with debt in their names. Most individuals have the intention of retiring debt-free. However, only one-quarter of retired Baby Boomers are actually debt-free. Many still have mortgages and consumer debt to pay off before they pass away. ff782bc1db