Using Your Will to Determine how Debts are Paid Off
Generally, everyone understands that their last will and testament is used to dictate who receives specific assets and other property of the estate. Nevertheless, most people do not realize that they can describe the manner in which particular debts are paid off too. Regrettably, most people’s debts do not just cease to exist after they pass away. More often than not, debts are handed down to your close family members.
Thorough and proper estate planning and anticipation can assist your family members manage these issues much more competently. That way the estate plan can work to lower any stress or confusion caused by the debts.
Types of Debts
Basically, there are two different kinds of debts. Depending on the type, it will impact how the debt can be paid after your death.
Unsecured Debt: Unsecured debt is a lot more flexible. Since it is not connected to any specific property, even if you used the credit to buy the object, creditors will not be able to repossess any property. The two most frequently occurring unsecured debts are hospital bills and credit cards.
Secured Debt: Debt that is associated with specific property is deemed to be secured debt. Which means the debt is assigned to either real property or an item. Car payments and mortgages are the two most common kinds of secured debt. In cases where people choose not to pay these secured debts, they will have the property connected to the debt taken away.
Willing Family Members Property and Debt
In cases where a family member is left an object that has a secured debt associated with it, then the debt will transfer with the property. People often fail to keep these debts in mind when they draft their will or trust. Failure to plan property and consider how that debt will be paid can place family members in unnecessary financial strain and distress.
When drafting a will or trust document you can clearly state that you wish for your family member to take on the debt. Or else, your family member may be forced to sell the property you have left them to get money for it, as opposed to taking on the debt.
Typically, debts must be paid out prior to your executor making any payments to beneficiaries. However, you are allowed to state that you would like to use a particular account to pay off debts first. Also, which property you wish to be sold in order to pay off debts, so that property would not be passed on.
Getting Help with Your Estate Plan
It is never too early to have your estate plan drafted. While estate planning may be uncomfortable to ponder, the Feldman Law Group is here to help you through it. Our experienced estate planning attorneys can carefully craft a custom-built plan that takes into consideration your particular situation.
You can get fairly creative with the manner in which you address your debt obligations. It is crucial not to stick your loved ones with unnecessary debts. With a knowledgeable and friendly Walnut Creek estate planning attorney, the process is much easier. You can count on our qualified team to observe your situation, confer your goals, and work to create a plan. Contact us online or call now at 925-283-6691 to discuss the specific details of your property and debts.