Takeaways
- Balancing debt repayment and estate planning is key — both influence your financial stability and your family’s protection.
- Debts don’t vanish after death. Creditors can file claims against your estate, potentially reducing what your heirs inherit.
- You can (and should) create a will or trust even while paying off debt — these legal tools protect loved ones and provide clarity.
- Prioritize high-interest or unsecured debt repayment while still putting basic estate planning documents in place.
- Combining professional financial and legal advice helps align debt management with long-term legacy goals.
- Being debt-free isn’t required for estate planning, but having a plan for how debts will be handled is essential.
The Debt vs. Estate Planning Dilemma
Many people delay estate planning because they feel weighed down by debt — credit cards, student loans, mortgages, or personal loans. The logic seems simple: I’ll create a will or trust once my finances are in better shape.
This hesitation is common but risky. According to a Gallup poll, only 46 percent of U.S. adults have a will. When you combine this with the fact that the average American holds over $105,000 in debt (according to 2024 Experian data), it’s clear that millions of families are left financially vulnerable.
Life’s uncertainties don’t wait for your balances to hit zero. Estate planning isn’t only for the wealthy, but for anyone who wants control over how their affairs are handled if they pass away or become incapacitated.
Debt and estate planning are connected, not competing priorities. The right plan doesn’t ignore debt — it accounts for it.
Why Debt Shouldn’t Delay Estate Planning
Even if you still owe money, your estate remains a legal entity after you pass away. If you die without a will or trust, state law decides how your property — and your debts — are managed. This process, known as probate, can be lengthy and stressful for families. Without clear instructions, your loved ones could face confusion, delays, and even conflict over what to do next.
Creating a will or trust ensures that:
- Someone you trust is legally empowered to manage your estate
- Assets and liabilities are handled according to your wishes
- Your dependents have guidance and support without court interference