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Massachusetts Estate Planning Lawyer Thomas Swain Smith explains how secured debts are treated in probate:
Before your property can be distributed to any beneficiaries named in your Last Will and Testament, your property will be used to pay the costs of probate, your funeral, and to pay the debts owed to any unsecured creditors of your estate.
Secured debts are treated differently, however. Secured debts are debts that allow the lender to take possession of a specific piece of property if the debt is not repaid. A common example of a secured debt is a mortgage.
Secured debts are not satisfied out of your estate. Instead, that property can be distributed, but the debt survives. If you have an unpaid mortgage on your home and leave it to a relative, they will inherit your home subject to the mortgage, meaning they now owe any unpaid portion of the mortgage.
