HANDLING DEBTS IN A WILL
People with a significant amount of debt should consider specifying how those debts should be paid in their wills. It could save their executors and heirs some headaches.
Most people will pass away owing money to someone. It is unfortunately unavoidable for most folks in America's credit-based economy.
Our debts do not simply vanish when we die, but must be paid out of the assets of our estates before anything is distributed to our heirs.
Most of the time this does not create substantial problems since the debts of a deceased person are fairly small relative to the total assets of the estate. For those people who do carry very substantial debt loads, it’s another story.
This death debt load can create problems for heirs and executors, as the Wills, Trusts & Estates Prof Blog explained in "Use Your Will To Specify How To Handle Debts."
Large debts can leave executors scrambling to figure out which estate assets to sell to pay off the debts. Heirs who thought they might receive a particular asset or a specific amount of money might be disappointed to have the asset sold or to have their inheritance reduced to pay off the debts.
One way to avoid these potential problems is to specify in a will exactly how your debts should be paid and to actually do so, before listing how your assets should be distributed to heirs.
It is easier for heirs to accept that they will not inherit something because of debt if a will never states that they should have it in the first place.
Specifying how to handle your debts also makes handling them much easier for an executor.
If you have large debts and would like to incorporate handling them into your will, visit an estate planning attorney for advice on how to do so.
Reference: Wills, Trusts & Estates Prof Blog (July 3, 2017) "Use Your Will To Specify How To Handle Debts."