Generally speaking, debt isn’t passed on; it dies with the person who borrowed money. If your father dies and leaves behind a condo that is $50,000 underwater, for instance, you might not be able to keep the condo, but you won’t inherit the debt.

Be that as it may, there are exceptions to this rule that can leave a surviving family member struggling with credit card debt or mortgage payments on a home that they can’t afford. It varies from state to state, but in general, the executor of your will is going to try to do whatever they can to settle the debt, and what they can’t sell is written off as a loss.

Here are the big exceptions in most states that can leave someone with inherited debt: Agreeing to work as a guarantor or co-signing for a loan. In these instances, the debt is usually transferred over to the surviving individual.

If you have assets which exceed your debts, then your inheritors are paid the difference. So $40,000 in debt and a $100,000 home would essentially give your children and loved ones $60,000 to inherit. Passing on $50,000 in debt and $40,000 in assets might result in nothing for the inheritors, but no debt, either, assuming that none of them were co-signers or guarantors on those debts.

It’s important to understand the rules in your state and speak with a Florida attorney if you need to make any arrangements. The last thing you want is for your children or spouse to inherit your debt instead of your assets. Getting debt taken care of in life is preferable, but at the very least, keeping your survivors in the clear is a priority.

Source: CNBC, “Who Inherits Your Debt?” Shelly K. Schwartz, March 16, 2012