Reports today pointed out the possible existence of a 2002 will for Michael Jackson (believed to be his last) that divides his estate amongst his mom, children, and charity, although it looks like Papa Joe was left out. Regardless of questions regarding the validity of Michael Jackson's will, whatever happens to his assets will probably be complicated by the fact that he had sizeable debts plus varied, complex financial relationships. Indeed, the Wall Street Journal story suggests Jackson died with an astronomical $500 million in debt. Although such debt is way, WAY, beyond that which most will ever face, it still may leave many people wondering what happens to debts after a debtor passes away?
Although for the sake of our children and families most would probably wish that it simply vanishes, it doesn't work that way. So what, does it become a families' debt, instead? That would be a rather painful legacy, and, fortunately, that is generally not what happens either. Generally, unless someone has signed on to it in some way, they cannot be held personally liable for another person's debt. Examples of such circumstances would be if someone has co-signed a loan or is a joint credit card holder. People should also be careful about intermingling their assets (i.e. in joint or family bank accounts), because for purposes of creditors, funds therein could be attributed to anyone with access to the account.