What Happens When You Leave Behind Debt?
After you pass away your debts will become the responsibility of your estate, which includes everything that you owned at the time of your death. Your personal representative will use your assets to pay off your debts. However, your beneficiaries and your heirs are not personally responsible for paying your debt.
What about Taxes?
A final tax return will need to be filed for the year in which you pass. An estate income tax return will need to be filed, once you pass the income generated by any assets you owned will become a part of your estate. Just as individuals have different tax brackets, trusts and estates also have different tax brackets. The income limits for each tax brackets change slightly from year to year, just as individual tax brackets.