When you take on debt, it does not go away when you die. Your estate becomes responsible for it.
The debts you owe could take money away from your family. But Maryland law does provide some protection for your heirs.
Before creditors can take a dime from your estate, the law requires the probate court to give your family an allowance. If you have a spouse, he or she will receive $10,000 from your estate. If you have minor children, they will each get $5,000.
Depletion of estate
It is possible the allowance would deplete your estate and leave nothing for debt payments. If this happens, then your creditors cannot collect. The only option they have is to seek payment from joint debtors, if there were any.
Debt payment order
Once your family gets the allowance, your creditors must get in line to collect payment. Your estate must pay all taxes first. After that, it will pay all medical expenses and any outstanding debts related to your death, including funeral costs. Next in line would be anyone who provided you care in the three months before your death. Only after paying all these debts would other creditors be able to collect.
Keep in mind, the law gives creditors a deadline for requesting payment. If they do not make a claim within six months, they lose all rights to collect on the debt. So, if there are no timely claims, then all your assets go to your heirs as dictated by your estate plan.