As we discussed in a recent post, if you are set to inherit assets or property following the death of a relative, you will also likely inherit his or her debt, whether it is from credit card bills, mortgages or unpaid taxes. In most cases, these debts must be paid before the rest of the estate can be distributed. Estate planning experts recommend employing a legal professional in such a case, but you can also educate yourself to make sure you can eliminate your inherited debts as quickly as possible.

First, it is important to know which assets are protected from creditors. For instance, life insurance policies are shielded from creditors in Florida, but such may not be the case in other states. Additionally, debts incurred by a business owned or co-owned by the estate-holder can be transfer to heirs following death.

Once you have determined which of the estate's assets are protected, you should compile all the debts you have inherited. For instance, if you inherit a house, you may be expected to continue with mortgage payments or face repossession. This is because loans collateralized by assets generally transfer alongside those assets.

Fortunately, a relative's credit card debts can typically be resolved without much hassle. Most credit card companies will either stop or slow accumulating interest on overdue payments once they are notified that a cardholder has passed away. According to one estate planning expert, some companies may also accept a flat payment instead of waiting through the sometimes long process of distributing an estate's assets and debts.

In difficult economic times, more and more people are likely passing down debt to their heirs. Sorting through all of it can be a complex and confusing process. Speaking to an experienced estate administration attorney may be beneficial.

Source: Fox Business, "Buried Under Your Dead Relative's Debt?," Marcie Geffner, Nov. 2, 2011