Part of estate planning is having a plan in place if the unthinkable were to happen; the passing of a significant other.

If a significant other, whether it be a spouse, fiancé or boyfriend/girlfriend, passes away and leaves you with his or her estate or other assets, you might be in a position of dealing with creditors that are looking to make good on outstanding debt. When the debtor passes away, creditors will investigate to see if there is any significant money tied up in assets that they might be able to cash in on.

Many times, this asset is a home, which comes with potential debt of its own.

In some states, houses can be transferred from one person to another via a transfer-on-death (TOD) deed. This is where an individual transfers the deed to his or her home to someone else upon their death. While it does not replace a will, a TOD will generally keep the house out of probate court proceedings. A TOD must be recorded with the county where the house is located.

Upon the homeowner's death, the new owner will simply have to sign a sworn statement and death certificate to take over. A TOD deed is only valid in a minority states, Arizona being one of them. But when a home is transferred from one person to another, the debt comes with it in the form of a mortgage. The person taking ownership of the house will also absorb any debt that has accumulated on it.

Source: Credit Cards.com "Who pays fiance's credit card debt if he dies?," Sally Herigstad, Sept. 9, 2011