People who are creating an estate plan usually think about things like who they want to have specific assets. They may not realize that they need to take steps to ensure this happens.
One thing that everyone who’s dealing with estate planning needs to know is how debts for the decedent are covered. Typically, the estate will have to cover debts after a person dies, but there are some points to remember.
Are there any assets that can’t be touched?
Creditors can’t access assets that are held in an irrevocable trust. This is because they belong to the trust and the decedent wasn’t in control of them. Instead, the trustee was in charge of the assets once the trust was created and funded.
Should loved ones pay debts?
Loved ones don’t have to the debts of someone who died. There are a few exceptions, including cosigners and joint account holders. Accounts with either of those would be the responsibility of that person. The estate wouldn’t be responsible for the debt if the co-signer or joint account holder is still living.
Debt collectors may sometimes try to get money out of grieving loved ones, but this is illegal. Anyone who’s contacted by a debt collector who’s trying to collect on a deceased person’s account should give the contact information of the estate’s personal representative. They shouldn’t ever give out any of their own personal or financial information.
Anyone who’s creating an estate plan should consider what will happen to their debts when they’re setting everything up. Working with someone who can help them to get it all in order is beneficial.