When you die and leave behind debt, your creditors still expect payment. During probate, the court will ensure that your estate pays off any debt in full. The money comes from your estate.
The issue here is that if you have a lot of debt, it could deplete your estate, leaving nothing for your heirs. Forbes explains that you can use your estate to protect your assets in probate and even now from creditors.
Limited Liability Company
If your concern is protecting your assets during your lifetime, then you might want to put them in an LLC. However, to avoid fraud issues, you need to make sure your LLC is an actual operating business. Putting your assets in an LLC will provide it protection from most creditors because these assets become the property of the business and not you.
One of the best options, though, that will protect your assets now and after your death is to use trusts. Anything in a trust is no longer your property.
You create the trust and place assets into that trust. Upon your death, the trustee takes over the trust and manages the assets within it until they transfer to the named heir. Because the trust sets up a legally binding agreement for those assets to become the property of the heir after your death.
Trusts do not go through probate because they are already legally bound to operate in a specific way to transfer your assets. So, creditors are not able to get access to these assets because they belong to the trust or the heir and not you or your estate.