The old saw, “You can’t take it with you” applies not just to assets, but also to liabilities, reports DeborahL. Jacobs, of Forbes. From huge tax debts, to loan guarantees, unfinished financial business can eat away at an expected inheritance and leave heirs with a bundle of trouble.
Such problems can include mortgage and commercial debt, medical and credit card bills and unpaid taxes, which can eat away at an expected inheritance and pose a risk to an executor who distributes money to heirs before discovering the debts exist.
Sometimes, it’s not only the direct debts of the deceased that pose a problem, but liabilities that he or she guaranteed. Did a relative co-sign a private student loan for you? If that cosigner dies, you may find the loan is immediately due or declared in default, even if you’ve been making timely payments, a recent report by the federal Consumer Financial Protection Bureau warned. Other joint loans too, can be called if one party dies.