Contracts like term life insurance and whole life insurance policies have no cash value until the insured person dies. The policy benefit is paid to your beneficiary when you die. It is important to name a beneficiary by their legal name. If you write terms like “my estate” or “my heirs,” then probate will determine who gets your estate. It can make it difficult, and it can be a lengthy process for the policy benefits to be paid out to the beneficiary if you use those terms.

What happens to your debts after you die? The deceased person’s estate owes the debt. If there isn’t enough money left to cover the debt, then it may go unpaid. Your survivors may be responsible for the debt if they co-signed for the obligation or live in a community property state. In California, the deceased person’s spouse and state law requires repayment of certain debt like health care expenses. You may be legally responsible for resolving the estate if you didn’t comply with certain state probate laws.

Under the FDCPA, collectors can contact and discuss a deceased person’s debts with the; surviving spouse, parents (if the deceased was a minor), guardian, executor, and any other person authorized to pay debts with assets from the deceased person’s estate.