Much of estate planning is focused on leaving assets to loved ones in a way that you deem fit. But there’s much more involved than that. For example, estate planning can also include a designation of who will make important financial and healthcare decisions in the event that you become incapacitated. Another issue that a lot of people worry about is what will happen to their debts once they’re gone. We hope this post will help shed some light on the subject.
Who is responsible for your debts after you die?
This is a good question, and one that requires a lot of attention. Generally speaking, your probated estate will be responsible for paying off your debts. This means that if your assets are left to loved ones only through a will, then creditors will have the opportunity to file a claim in hopes of recovering debts owed. Depending on your set of circumstances, this could mean that your creditors can quickly gobble up your estate.
While this means that your loved ones may not be directly responsible for most of your debts, there are some circumstances where they will be. Other individuals may be required to pay each of the following debts back, especially since Texas is a community property state:
- Co-signed loans and mortgages
- Jointly held credit cards
- Debt accrued during the course of the marriage, including medical bills
How to protect your assets and your loved ones
The thought of your accumulated wealth suddenly evaporating into the hands of creditors can be stressful and downright scary, especially if your family is depending on an inheritance to get by. Fortunately, there are things you can do during estate planning to pass down assets while avoiding the long reach of creditors. Many trusts, for example, escape the grasp of creditors, meaning that your loved ones can enjoy the assets you intended them to receive. This can be a complicated area of the law, though, so it’s probably best that you discuss your unique set of circumstances with an attorney of your choosing.