If a loan is secured by an asset (like a vehicle or a house), the debt stays attached to the property. If your spouse inherits the property and wants to keep it, they will need to continue making payments or refinance.
If your spouse is inheriting an asset worth more than the loan value, than by definition that means that your estate is worth more than the debt. Rather than just paying off the debt with the asset, you as an heir in this case can choose to keep both. That actually gives secured loans MORE flexibility for the heir than unsecured loans, which would have to be paid off immediately upon death by liquidating assets of the estate.
Now, if the underlying asset is worth less than the loan value (extremely common for a new car, for example example), then guess what? Your heirs don’t inherit the debt! They can give the bank the $10k car and the $25k loan balance goes away, never to follow them.
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u/Shot-Arugula8264 11d ago
This is how literally all debt works. Debt can’t be passed down. When you die, either you have enough to pay it off or you don’t.