A strong estate plan is not just about providing for the ones you love, it also encompasses building protections for your assets against debts that could harm your spouse or beneficiaries. This is particularly true if you have significant debts. A well-crafted estate plan can help ensure that the ones you love do not have to face their inheritance being gobbled up by creditors seeking payment after you pass away.
In broad strokes, when a person passes away, creditors have very few avenues to legally pursue payment on debts, but that doesn’t mean that they will play by the rules. Often, debt collectors will pursue collections against the survivors of a debtor, even though this is usually illegal. The one individual most vulnerable to legitimate collections is a deceased debtor’s spouse, but there are ways to protect against this.
If you have significant personal debt, you should consider consulting with an experienced estate planning attorney who can help you explore various tools you may use to create barriers between your assets and your liabilities. In many cases, this means creating a trust that removes your assets from your personal ownership, placing them outside of the reach of creditors.
Each person’s needs are different, and different types of debt can hang around more stubbornly than others. Protecting against debtors is not always possible, but a little prevention can go a long way. If you want to protect your assets and the ones you love from aggressive collections tactics after your death, be sure to work with an experienced estate planning attorney to build a strong estate plan that addresses your needs.
Source: Findlaw, “Paying the Debts of a Deceased Relative: Who Is Responsible?,” accessed July 07, 2017