What happens to your debt after you die?

One question I get often from clients is, What happens to my debt after I die? Great question – but before we delve into the answers, I wanted to share with you three opportunities in June to attend a seminar I’m hosting with Round Table Wealth Management titled: Trump: Time to Update Your Investment & Estate Plan, But How? On June 7, I’ll be presenting in Scotch Plains, on June 8 in Red Bank, and on June 13 in Princeton. Please email me if you’d like to attend and I’ll send you an invitation! Our first seminar in Franklin Lakes was a great success!

 

Back to our regularly scheduled programming: Debt. While you ponder your mortality from time and time and think about the distribution of your assets, have you thought about what will happen to your outstanding debt?

In the past we have written about the need to appoint an executor you trust who will administer your estate in the most efficient way possible. One of the responsibilities of your executor is to take care of your outstanding debt. This is done by using the assets and property you leave behind to cover the balance. It some cases, this may require liquidation of property. Whatever is left over after your debts have been paid may then be distributed among your heirs.

Consider the following types of debt and what happens to it when you die:

  • Student loans — Federal loans are discharged upon death. Private loans, however, are not. In some rare cases, a private loan company may issue debt forgiveness, but it is unlikely. If you pass away with private student loan debt, the balance will attempt to be collected from your remaining assets and estate. Should your estate fail to cover the cost, the private loan company will then attempt to collect the debt from your spouse.
  • Credit card — If you are the sole owner of the credit card debt, then the credit card company will attempt to collect the balance from your estate. Should you have a joint credit card account, the co-signor of the account will be responsible for the outstanding debt.
  • Medical debt — In the event that you have medical debt, the funds from your estate will be used by your executor to cover the cost. Another person may take on the responsibility of your medical debt if they signed legal documents agreeing to do so. In the event that your estate is unable to pay off your medical debt, it will not be inherited by your heirs.

When drafting your estate plan, it is always a good idea to try and reduce the debt you owe by as much as possible, especially if you want to leave substantial property or assets to your loved ones. Any debt you accrue while you’re alive may deprive your family of the inheritance you intended for them to enjoy.

Whether you need help setting up a trust, probating a will or creating a detailed estate plan, be sure to consult with a skilled attorney. To discuss your estate planning matter with us, contact Alec Borenstein, Esq., a partner with the firm at alec@bmcestateplanning.com or call 908-236-6457 today.

Five Unusual Will Requests

wills, estates, estate planning, what, to, leave, union, hunterdon, new jersey

Five Unusual Will Requests

A will is simply a document that explains your final wishes. Most last will and testaments leave instructions such as how earthly remains should be handled, what assets should go to whom and what will become of the deceased’s estate.

However, while these will requests are common, many testators leave very specific and sometimes unusual instructions for the living.

Following are five will requests that are anything but ordinary:

1. William Shakespeare — When the playwright passed away in 1616 he bequeathed in his will something a bit odd to his wife — his second best mattress/bed. Now, in the 16-1700s, good beds were hard to find (think bedbugs, hay, lice) and leaving a bed or mattress to an heir was commonplace. But leaving your second-best bed? Strange.

2. Janis Joplin — With her unmistakable blues voice and reputation for heavy drinking and drug use, Janis Joplin was truly a rock star. In fact, a mere two days before her death she updated her will and set aside $2,500 to be exclusively used on a posthumous party for her friends at her favorite bar in San Anselmo, California.

3. Fredric Baur — Once you pop, you can’t stop! Fredric Baur invented the Pringles can for Proctor & Gamble in 1966 and he was so proud of his creation that he requested his cremated remains be buried inside of one. When Baur passed away in 2008 after a long battle with Alzheimer’s disease, his sons honored his wish and filled an original flavor Pringles can with their father’s ashes.

4. Robert Louis Stevenson — Perhaps one of the most interesting will requests was made by Treasure Island author Robert Louis Stevenson. Stevenson had a longtime friend who frequently lamented that her birthday was the same day as Christmas and therefore, she felt cheated out of her birthday. To spare her any more years of grief, Stevenson left his birthday, November 13 to his friend Annie H. Ide.

5. Mark Gruenwald — Unless you’re a Marvel Comics fan, you’ve probably never heard of Mark Gruenwald. Yet unless you’ve been living in a cave, you undoubtedly know of the two superheroes he dedicated his life to — Captain America and Ironman. When he passed away in 1996, Gruenwald’s will requested that his ashes be mixed with ink and used to print new comics. It is said that Marvel fulfilled his wish.

These are only a few of the many creative and unusual will requests that people have made. If you live in Hunterdon or Union Counties and need assistance drafting your unique will or handling any other aspect of estate planning, contact Alec Borenstein, Esq., by email at alec@bmcestateplanning.com, or call 908-236-6457 today.

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