Debt – what happens when you’re gone?

debtMost people have a better understanding about inheriting assets. But few understand what happens with debt!

What Happens to Your Debt After you Die” in US News by Geoff Williams talks about the cautionary tales of not understanding what debt may be forgiven and what debt must be paid. Thus … your actions before going may put your heirs in a bind … as could their actions too.

What happens depends on what kind of debt and who has the assets.

Read the above, via link, to find out about what happens to you as heir with the decedent’s

  • Credit card debt
  • Mortgages
  • HELOCs
  • Autos
  • and be careful about what financial agreements you sign for a dying parent in the hospital or elsewhere.

Deathbed gifts: “So, for example, if the doctor gives your mother two weeks [to live] … and she makes significant gifts during that time period, which causes her debts to exceed the assets of her estate, the creditors may be successful in getting the court to order the gifts be returned to the estate,” he [Love] says.

Even thinking that using the decedent’s credit cards to pay their bills after they’re gone may set you up to be liable for ALL the credit card’s balance, even those expenses before they died!

Moral of the story: believing that piling on debt will be free money because you’ll be gone, and all debt is forgiven, is a mistake.

 

About Larry Frank, Sr.

Larry R Frank Sr., MBA, CFP®, is an experienced financial advisor and a published author on Retirement Planning Research. Have a financial question? Click Here to Ask Larry

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