Many California residents believe that when a loved one dies, the debts that he or she still owed will be taken care of by the decedent’s estate. In some cases, however, family members may be held to be responsible for paying certain obligations that were left behind. People who are contemplating the creation of an estate plan may thus want to have a discussion of these matters in order to help prevent surprises to their intended beneficiaries.
When dealing with debt planning in this manner, people should be honest about their financial obligations. Family members should be aware that jointly-held debts may become the responsibility of the other account holder. This could include a joint credit card or a home mortgage. The other person on the account may want to establish credit on their own for future use.
Collecting all relevant documents together in one filing system can be an important step. In the event a person passes away, this process can help the executor as well as surviving family members access the needed information easily and quickly. Leaving notes behind that can guide the executor in how to handle these obligations may also be important. After the person dies, family members should notify the three major credit bureaus in order to guard against the theft of the decedent’s identity.
Evaluating existing indebtedness and planning how to handle it can be an important part of a comprehensive estate plan. After the relevant asset, tax and debt documents have been collected, they can be reviewed by an estate planning attorney and then taken into account in the preparation of a will or trust. An attorney may also be able to identify debts for which family members will have future liability, as well as those obligations which will be the responsibility of the estate.