Your loved ones may have an estate plan in place, but it’s not often they outline a plan for every penny. Even if they laid out generous designs for the family, failing to account for assets in the red could lead to hard times ahead.
73% of Americans will likely die with some type of debt, averaging over $60,000. While that can seem alarming, a staggering 83% of retirees over 72 don’t even know if they will fall into that statistic. That means a good chunk of people probably don’t have a concrete plan for their end-of-life financials. And depending on the form of the balance, you might have to contend with some of those amounts yourself.
Older Americans are most often hit with debt from credit cards, mortgages and loans, and you may have to figure out who will have to pay:
- Estate: One of the big components of settling an estate is handling the assets, and this includes creditors. The estate will likely be responsible for the bulk of costs, from taxes to outstanding amounts. Many with a claim can come calling, but usually only if there’s enough to go around.
- Beneficiaries: Money that’s taken from the estate can’t pass to the family. While this may count as indirectly paying debts, that is probably the extent. Creditors usually can’t go after policies in your name, like life insurance plans or investment accounts.
- Cosigners: Cosigning for your parents may have been necessary to get them the care or comforts they needed later in life. Unfortunately, this is one way that you may personally be on the hook for money they still owe. You guaranteed they would pay with your signature, so now they may come knocking on your door.
Handling an estate can be a very difficult process, and you should do it with great care. Make sure your loved one’s estate plan takes everything into account, and you could be looking at benefits instead of bills when the time comes.