Those creating or modifying an estate plan have a wide range of issues to take into consideration. Sometimes, people face a lot of uncertainty as a result of debt and there are different ways in which debt can affect an estate plan. For example, some people have to take a second look at their assets and the way in which property is distributed among beneficiaries due to financial challenges.
According to the Federal Trade Commission, debt does not disappear after one dies and is sometimes taken from one’s estate or even their loved ones. If you are struggling with debt, it is very important to think about your estate plan as you work through these financial issues.
How does debt affect families after a loved one’s death?
There are various ways in which debt can impact a family after their loved one dies. For example, if you have high levels of debt, it is important to discuss this issue with the executor of your estate and make sure that they have a solid understanding of their responsibilities with respect to debt and other financial obligations (such as taxes). Moreover, it is often helpful to talk about debt with beneficiaries, especially if significant debt will interfere with the distribution of an estate’s assets.
How can you reduce debt-related stress?
Debt is often very stressful and some people feel so overwhelmed that they do not focus on their estate. Sometimes, filing for bankruptcy is a good idea, but it is vital to carefully consider the impact of bankruptcy, your estate plan and other financial matters if you take this approach. People can reduce stress regarding their debt by understanding their options and the impact of debt with regard to their estate. Taking steps to eliminate debt and improve one’s emotional state (such as talking to friends and family members or starting a new hobby) is often helpful.