A long, wonderful life is not always debt free. Those debts will be transferred in the event of one’s passing. Taking steps to address your debt will ensure future generations are not burdened with impending financial strain. Understanding what those debts will be is also essential to this process. Below are a list of common debts you may be leaving behind.
People do not always account for the costs of their own funeral, but funerals can be quite expensive. A casket, venue, burial, invitations and other expenses can quickly add up. Including these costs in your own plan can help reduce the stress on your loved ones. A funeral should be more focused on the celebration of your life, and less on the turmoil of paying for your funeral.
Injury and illness can deplete a bank account. Any remaining debt will be passed on to your estate. Planning for this time in your life and putting money aside for medical expenses can help absorb some of those costs. Although you cannot always plan for a catastrophic medical emergency, having any money set aside is certainly better than none at all.
Co-signing debt often means you agreed to pay half of whatever loan was taken out. In your passing, the co-signer will be left with the full loan amount. The co-signer may lose what you two have worked hard to obtain, simply because they cannot afford the payments on their own. Choosing the right beneficiary or creating an account to help pay the loan to completion will help your co-signer cope with your absence. You can avoid losing a valuable piece of property, a successful business, or important equipment by having the right plan in place.
Accrued legal expenses can come in a variety of ways. This includes someone suing you (or your estate) or legal expenses related to your passing. Any legal matters before or after your death could be expensive. Be sure to include these in your estate planning estimates.
Taxes are one of the most common debts left behind. This includes back taxes, current taxes, or estate taxes. Tax strategy is therefore an essential aspect of estate planning. By taking a well-planned approach, you can minimize the burden of taxes and maximize the value of your estate.
Planning for Debts You May Be Leaving Behind
So much of estate planning focuses on assets, but it’s equally important to plan for debts. After all, your debts will offset the value of any assets. Contact our team to discuss debts you may be leaving behind and how to effectively manage and account for them in your overall estate plan. Our Massachusetts estate planning attorneys will take the time to understand your personal circumstances and work with you to formulate solutions.