Even those with the best of intentions can fall into the trap of estate planning misinformation. Estate planning attorneys frequently hear rumors and ill advice disguised as facts.
One of the biggest concerns a trust creator might have is that the beneficiary would squander their inheritance or that the beneficiary’s creditor would attach the inheritance to cover the beneficiary’s debt.
Especially with the average U.S. household having $7,027 in revolving credit card debt and Americans owing a total of $416.1 billion in credit card debt, according to a recent Nerdwallet study, some Americans will have credit card debt for the rest of their lives. However, what happens to credit card debt when you die?
Debts, just like assets, are considered part of a person’s estate. When that person passes away, their estate is responsible for paying any and all remaining debts. The money to pay those debts comes from the asset side of the estate.
If you are concerned about incurring debt after a family member’s death or are worried how your own debt will impact your family, here are some things you should know.
Creditors typically try to collect on unpaid debt, by going after the decedent’s estate during a process called probate.
Regardless of whether the law makes sense to us, we are all required to abide by it.