What Happens to Your Debts When You Pass Away in Illinois?

 Posted on April 16, 2025 in Estate Planning

When someone passes away, it is natural for their loved ones to think about the emotional and financial challenges that may follow. One of the most important things to consider is what will happen to any debts the person leaves behind. In Illinois, as in many other states, debts do not disappear when someone dies. Instead, the deceased person’s estate is responsible for paying those debts before any assets are distributed to heirs. 

Understanding how debts are handled can help families make informed decisions during the estate planning process. An experienced Wheaton, IL estate planning lawyer can review your options for addressing your debt after you pass away.

How Is a Deceased Person’s Debt Handled?

In Illinois, when someone passes away, their estate—consisting of all their assets, like property, savings, and investments—is responsible for paying off any outstanding debts. These debts can include things like mortgages, credit card balances, medical bills, and car loans. The responsibility to pay off debts does not automatically fall to the family or the person’s heirs unless they are co-signers on loans or have a legal obligation to pay.

After death, the executor or personal representative of the estate will first identify and gather all the assets. They will also need to create a list of all the debts owed by the deceased. This process is often done through probate, which is the legal process that helps manage the distribution of the estate. The executor will use the estate’s assets to pay off debts in the following order:

• Funeral and burial costs: These are usually paid first because they are considered urgent expenses.

• Secured debts: These include debts tied to property, such as a mortgage or car loan. If the estate cannot pay these debts, the property can be sold to settle them.

• Unsecured debts: These include credit cards, medical bills, and personal loans. These are typically paid after secured debts.

• Taxes: An estate might also need to pay taxes owed, such as income or estate taxes.

If the estate does not have enough assets to cover the debts, the remaining debts might be forgiven. However, family members or heirs are not personally responsible for these debts, unless they were co-signers or had joint accounts with the deceased.

One way to avoid confusion and ensure that debts are handled properly is through careful estate planning. By creating a comprehensive estate plan, you can make sure your debts are clearly outlined and that your loved ones understand what to expect. A will or trust can help direct how debts should be paid and ensure that your estate is managed based on your wishes, and a lawyer can help you make this happen.

Contact a Lombard, IL Estate Planning Lawyer

Understanding how debts are handled in Illinois after death can help families prepare and reduce confusion during a difficult time. If you are concerned about how your debts will be managed after you pass away, speak with an experienced DuPage County, IL estate planning attorney who can help you create a plan to protect your loved ones from unnecessary burdens. Call A. Traub & Associates today at 630-426-0196 to learn more about how we can help you prepare a clear and comprehensive estate plan.