What Happens to Your Debt When You Die?
When thinking about the pain incurred by the passing of a loved one, the last thing we want to consider is debt. But, unfortunately, an individual’s debt doesn’t vanish when they pass away and creditors will often swoop in to collect as much of that debt as possible. So, what can you do now to prevent the pain of your debt from being felt by those you care about?
We’ve compiled a list of some tips and tricks to stop debt in its tracks and keep creditors from picking apart what’s left after death.
1) Listing your descendants as heirs on your pension is a quick step to prevent creditors from collecting money out of your IRA.
2) Get life insurance. Life insurance enables your family to receive money that can help protect them from the damage of debt. You can make the most of life insurance by letting your Trust be the beneficiary, this way your descendants won’t inherit your debt.
3) Don’t name your children as executors of your estate. The executor often bears the responsibility of ensuring debts are paid.
4) Remove assets from your estate, consider an ILIT or other trust and leave a large portion of your estate to your spouse in order to minimize estate tax.
5) Pay as much of your mortgage as possible. The debt of home mortgage isn’t erased with death. This means that if you leave your home to your family they’ll have to shoulder mortgage payments.
Of course, the best way to figure out exactly where your debt is going to go and what you can do to stop it is to talk to professionals. Morgan Legal Group offers estate planning services from a committed team that prides itself on integrity and offers personalized attention. Schedule an appointment and find out how we can help you protect your loved ones.