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How should I word my will if my debts outweigh my assets? I don't want to leave any family members stuck with a huge bill when I finally pass away, so what should my will say?

Clarification: This is in Canada

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You won't leave your family members with a bill no matter what you do (other than the bill for the funeral).

In the simplest case, your executor will sell the assets and use the proceeds to pay off your creditors. If the assets aren't enough to pay off your creditors, your creditors will write off any remaining debts. Your family members can't inherit a debt from you. Of course, if you die with more debts than assets, your family members won't be able to inherit any assets from you either so your will won't make much of a difference. If you expect that there may be a small positive balance left over, a simple will of "x% to Alice, y% to Bob, z% to Charlie" likely makes the most sense rather than trying to make specific bequests. If you really care that some assets not be liquidated if at all possible, you could express those preferences in your will (i.e. "if at all possible, don't sell Grandpa's stamp collection, I want that to go to Steve") but that's likely to make your executor's life more difficult.

Of course, since this is a legal topic, there are plenty of things that potentially complicate things. For example, if you give away large amounts of assets before your death, and your estate has outstanding balances, it is possible that the creditors could recover some of those gifts. If you are married, then it will matter which assets and liabilities are joint and which are yours alone.

  • Do you know if this is US law? Canadian law? Both? Thanks. – Octopus Jan 12 at 5:20
  • @Octopus - The basic answer is going to be the same in Canada and the US (and just about any first world country). The details will differ between countries and between territories and states so you'd want to consult an actual lawyer in your particular province. – Justin Cave Jan 12 at 5:28
  • In Germany AFAIK your heirs will inherit both and can choose to decline so they will get neither. – xyious Jan 14 at 20:22

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