Debt After Death: How to Avoid Passing Debt on to Your Loved Ones
Many people assume that once they die, their debts die with them. Unfortunately, this is not always the case. American seniors are now carrying more debt than ever, and if not dealt with properly, this debt can eat into your estate after you die and even destroy any inheritance that you planned to leave to your loved ones. In order to keep the next generation from having to deal with your debts, here’s what you need to do.
Know Your Legal Rights
The first thing to do is to be fully aware of the legal rights of your estate. Sometimes creditors will come after next of kin after a death, trying to gain payments that they may not be entitled to. In order to avoid this type of ordeal, you and your loved ones should fully understand your legal rights when it comes to debt. It’s important to know that, generally speaking, your next of kin are not required to pay off any outstanding debts that you owe after you die. However, there are some exceptions. First of all, any assets (such as properties, vehicles, bank accounts, etc.) that are part of your estate after you die must be used to pay off any outstanding debts you owe before the estate can be disbursed among your beneficiaries. Also, if anyone was a co-signer on a loan that the deceased person owes money on, that co-signer could be responsible for paying off the debt.
Hire Professional Help
Estates and legal rights can be very complicated, especially since laws are different in every state, so if you’re really concerned about passing on debt to your loved ones, it’s best to hire professional help. A qualified estate planner can help you write your will and plan your estate in such a way that you will minimize the financial burden that is passed on to the next generations.
Make Sure You Are Properly Insured
Another way to protect younger generations against paying off your debts is to have adequate insurance. Both life insurance and loan protection insurance policies can be used in this circumstance. For more on insuring yourself against passing on your debt, you can talk to a representative of a reputable insurance company.
Start Paying Off Your Debt Now
Perhaps the simplest way to ensure that your debts are not passed on is to start paying them off as soon as you can. If you’re worried that your next of kin will be forced to look for debt relief, you can help them by paying off as much of your debt as you can right now.
If you’re concerned that your debts will haunt future generations, planning for your future will make a huge difference. It can be extremely difficult to deal with estate debt if that debt has not been handled properly. Additionally, creditors or even fraudsters may try to take advantage of families that have recently lost a loved one, so it pays to learn about your rights and make sure that your estate is properly set up for debt management.
If you’re struggling to pay debt on your own, and need some outside help, we’ve reviewed a bunch of debt relief companies that might be able to give you a hand.