The point of putting together an estate plan is to ensure that your loved ones receive something of value after you have passed away. While it is beneficial to ensure that your loved ones receive your assets, estate planning also helps ensure that your debts are paid after your death.
Out of sight, out of mind?
As much as you may wish it were true, your debt does not just magically go away once you die. The creditors that you owe money to still expect payment even if you are no longer alive to make it. It is completely legal for creditors to come after your estate to recover any money that you owe them.
It is important to note that creditors only have a certain period of time to file a claim against your estate. The laws regarding this statute of limitation vary by state, so educating yourself about your state’s laws is important when you’re trying to make your estate plan. If you fail to plan for your debts in your estate plan, creditors may go after your heirs to recover their money.
Mortgage debt after death
If you have a mortgage with another party, the other party is responsible for that loan after your death. The only way to prevent the other party on your mortgage from being responsible for the loan is to put payment for the outstanding loan amount in your estate plan.
Planning for your debt is just as important as planning who receives your assets after your death. Finding an attorney who knows your state’s laws concerning probate and estate administration is vital for anyone who wants to put a proper plan in place. This attorney may review your assets, tally up your debt and help you put a responsible plan in place.