According to the United States Department of Labor, approximately 77 percent of American households have at least some type of debt. If you are the primary financial provider for your family unit, your outstanding debts may be heavily weighing on you. Further, your worst nightmare may be to unexpectedly and unfortunately passing away and leaving these debts for your family to deal with. Well, please allow us to put some of your worries at ease. That is, please read on to discover who is responsible for paying off your outstanding debts when you die and how a seasoned Broward County estate lawyer at The Probate Lawyers can help you avoid any serious complexities with this in the future.
Who is responsible for paying off my outstanding debts when I die?
As far as your personal debts go, the appointed executor of your estate may be charged with using your leftover money and property to pay off your outstanding creditors. You should know that this money and property may be what you promised to your family members as your beneficiaries. Therefore, their inheritances may be less than you initially wished for them. However, the silver lining is that your family members may not be expected to take on the financial burden of paying off the personal debts you incurred throughout your lifetime.
On the other hand, you may also have outstanding joint debts, in which you took out a loan with one or more other people. For this, you may expect the surviving people to be responsible for paying off the remaining balance. Common examples of joint debts, which you may likely possess, are mortgages, car loans, and credit card debts.
How can I avoid having significant outstanding debts when I die?
You may not want significant outstanding personal debts so that you do not diminish your loved one’s inheritances. At the same time, you may not want to unfairly leave behind a large amount of joint debts for the surviving borrowers to have to deal with. So, for both of these cases, you may want to establish a solid estate plan.
For one, it may be in your best interest to establish living trusts on behalf of your desired beneficiaries. This is so they may guarantee the money and property you wish to leave behind for them, as these trusts cannot be subject to credit claims. Secondly, it may be best to opt for an adequate life insurance plan. This is so these funds may be used to pay off your outstanding debts, along with your funeral and burial expenses, without having to dip into your beneficiaries’ inheritances.
Generally speaking, throughout your lifetime, you should prioritize paying off your high-interest debts first; consolidating your multiple debts into a single loan; and overall creating a budget to control your spending and productively chip away at your owed debts. As someone crafting an estate plan while experiencing debt, there is nobody better you can turn to than a competent Broward County estate lawyer from our firm. So please, call us at The Probate Lawyers as soon as possible.
