Onondaga County residents who are looking into estate planning issues may be interested in how to handle a person’s debt after death. The answer may change depending on the type of debt and other variables.
When a person passes away while still owing money, questions arise about how to deal with these debts in the estate. One of the first steps in understanding what to do about this debt is to seek the advice of a professional, such as an estate planning attorney. Next, one should be honest with the beneficiaries of the estate about how much is owed while they are still alive. This can help to manage expectations and avoid issues later. All of the documents related to these debts should be gathered and transferred to one location for easy access. It is important that they be kept updated, as well.
All of the debts should be examined in an effort to understand which need to be paid and which are exempt. Many unsecured debts that are kept solely in the person’s name, such as student loans and credit card debt, may not have to be paid after their death. The executor of the person’s estate should be counseled on which debts require repayment, since creditors will most likely be reaching out to them whether the debt needs to be paid or not. Other special situations may arise, particularly when there are issues with Medicaid or other public financial aid. These may require assets to be sold after the person passes away.
Debts often present complicated estate planning issues that should be addressed through an attorney. The attorney may also be helpful in drafting estate planning documents or assisting in will execution in order to ensure proper distribution of assets.