Factoring Debt Into Your Estate Planning
Statistics show that the average middle income person in Florida around age 50 carries more debt than ever before. This can be a challenge when they pass away and their estate is divided. Though debt collectors cannot go after survivors to collect unpaid liabilities, they can get the unpaid funds from assets in your estate. If you have debt, any unprotected property is promptly sold to pay off the money that you owe. This can eat a deep hole into any inheritance that you were hoping to leave, or even wipe out your estate entirely. Factoring your debt into your estate planning is critical.
It is important to be honest and open with your beneficiaries about your debts. Make a list of any debts that you owe, along with your current assets. If the family dynamics are well, give the names of other beneficiaries and account numbers with passwords. Life insurance can help to pay off existing debts in the event that you pass away, so be sure to purchase an adequate amount. Also, name a clear beneficiary for assets that would certainly go to probate.
It is recommended that you start to pay off your debt as soon as possible. If you feel that it is impossible to pay it all off before you die, consider purchasing loan protection insurance. The value of this policy will decrease as you pay off the outstanding loans, but it will help to pay off your debt in the event of your death.
It is highly recommended that you speak to a well versed attorney if you have any additional questions.