Death and Debts: OUCH!

Debt lives!When a loved one dies, is it possible to inherit their debt? It's a serious question for heirs, particularly for couples who hold debt jointly. In most cases, a deceased person's debts fall to their estate for payment. However, depending on state law, shared credit relationships and the amount of debt in question, surviving family members may be shocked to learn that they could be legally liable for remaining debt that they weren't aware of or had expected their loved one's estate to cover. That's why it's wise to include debt planning in individualized estate planning as early as possible.

A recent article in The Huffington Post, titled “Debt and the Deceased: How Should Spouses and Heirs Proceed?,”offers some thoughts to consider when planning ahead.

Be honest about your financial situation. It’s not that easy for some family members to discuss debt issues, especially older Americans who hoped for better at the end of their lives. Even so, parents and their adult children or spouses should thoroughly talk about any outstanding debts that could affect the borrower's estate.

Get qualified advice. It’s easy to see that a young couple probably has a different set of debt issues than a retired couple. The article advises borrowers to speak with a qualified estate planning expert for ways to extinguish or manage debt issues as part of current financial and estate planning.

Organize your documents. The article urges you to consolidate all of your loved ones’ important financial documents in one centralized location. Ideally, all of the asset, debt, and tax documents would be included in an organized filing system… and it needs to be kept current!

See what needs to be repaid. It’s important for borrowers and their executors to know what categories of the deceased's debts will most likely need to be repaid after his or her death and which ones might be canceled. Some types of unsecured debt held in the deceased's name alone, such as credit cards or federal student loans, typically may be discharged.

Educate the executor. The article reminds us that collection agencies have the right to try to collect on any outstanding debt they are hired to pursue—even when the survivors may not be legally bound to pay the debt. You’ll need to know what debt is left behind and whether the estate or individual family members might be liable. An experienced estate planning attorney can help. Once this is done, the executor should be told of this, and if possible, the borrower should leave good notes about how the executor should respond.

You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.    

Reference: The Huffington Post (April 1, 2015) “Debt and the Deceased: How Should Spouses and Heirs Proceed?”

Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin
Share on pinterest
Share on Pinterest

Leave a comment


We have a LOT more where that came from!

We hate spam too. We will never share or sell your information.

Call Now ButtonCall Us Now https://jsfiddle.net/7h5246b8/

Request a free consultation

We hate spam too. We will never share or sell your information.

We've been putting together as many resources as possible so that we can continue to help:

  • If you’re a current client with a signing appointment or a prospective client with a consultation and would prefer that meeting take place in your own home, we can accomplish that with a little bit of pre-planning on our part and with the addition of a laptop, smartphone, tablet or other computer in your home to facilitate this virtual meeting. For those of you that need to sign legal documents, that too can be accomplished with the use of a webcam (FaceTime etc.), so that we can witness and electronically notarize all of your important legal documents.
  • We launched the rollout of our on-demand webinar early so that new clients and our allied professionals can view the important component parts of ‘an estate plan that works’ at their convenience.  That is available on our website.
  • Live video workshops will be produced as quickly as possible and certainly ahead of our previous schedule; we will keep you posted as these events become available. Given the ‘boutique’ nature of the firm, we rarely have more than ten people in our office including team members at any one time. During this period of ‘social distancing,’ we promise to have no more than 8 people at any time.   This allows us to comply with the Governor’s directive to limit in-person gatherings.
  • The best way to communicate with us is still by phone during regular office hours of 8:30 to 5:00, Monday through Friday, or, you can email any of our team members (that is, their first name followed by @zarembalaw.com).  We will respond to these emails as quickly as possible.
  • Please continue to follow the directives of our local, state, and federal agencies. For your health and in consideration of our team who is assisting you, if you’ve scheduled an office appointment or planned to drop off paperwork and are experiencing a fever, dry cough, or shortness of breath, please contact your primary care doctor for guidance and then our office to reschedule.

Thank you, Walt and the Zaremba Team

Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.