Episode Update - Does Debt Follow The Death Of A Parent?

In a recent article, What happens to your debt after you die? How to protect your heirs, Bankrate covers some key topics about debt and death:

Most debt will be settled by your estate after you die.
In many cases, the assets in your estate can be taken to pay off outstanding debt.
Federal student loans are among the only types of debt to be commonly forgiven at death.

Luckily, we have our own expert who covers this very subject in a previous episode entitled Does Debt Follow The Death Of A Parent? with Schraeder Law, LLC.

Estate planning attorney Larae Schraeder from Schraeder Law, LLC is our guest on this episode.

She’s a listener favorite!

Key Legal Documents and Debt

A core message in this episode is the importance of key legal documents for end-of-life planning. Larae suggests that a general durable power of attorney, healthcare documents, and a living will are fundamental. These documents specify the individual’s wishes, ensuring their intentions are respected and reducing the burden on loved ones during challenging times.

The Financial Realities of Estate Planning and Probate Court

“The answer is creditors have 6 months to come forward to stand in line for any assets that are going to pass by way of the will or through probate.”
Larae Schraeder

Larae advises knowing the trusted advisers and financial institutions a parent uses, especially since many seniors now receive electronic statements. Having a comprehensive view of all financial activities and transactions, including mortgages, insurance policies, and other accounts, is imperative. This preparation ensures prompt and efficient management of these elements once a parent has passes away.

Don’t Underestimate The Power of Attorney

Larae accentuates the value of having power of attorney to manage financial matters such as bills, taxes, and debts. The ability to check made payments and manage funds is crucial to avoid overlooked financial obligations. The timing of debt claims, typically within six months of death, and the varying priority of payments, including funeral expenses and associated bills, are essential considerations.

Revisiting Estate Plans in Times of Change

“And when you just kind of know in the back of your mind that there’s a clock, it’s 1 thing. But when you really are facing a different challenge or your parent passes and you’ve seen how you want it to go or not want it to go, sometimes that is a prompt to to revisit an estate plan.”
Larae Schraeder

By addressing key documents, digital assets, financial responsibilities, and the timely management of debts, Larae provides listeners with a comprehensive understanding of managing life’s final chapter.