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Debt planning as part of estate planning

Gregory A. Lang

Individuals in Minnesota who are estate planning might also need to consider some issues that might stem from their accumulated debts. In some cases, an individual's estate can be wiped out by debt, and that person's debts might pass to surviving family members under certain circumstances.

Honesty and communication might help a person avoid unnecessary difficulties during the execution of an estate. Individuals should be up front with family members and with professionals about their outstanding balances. The individuals who are estate planning, the appointed executor and close family members should have a good understanding of the debt and who is responsible for it. Doing so may help with the process of creating a comprehensive estate plan. Having easy access to financial documents in the event of an individual's death may make things run more smoothly.

In most cases, federal student loans and credit card debt may be discharged after a person passes away. However, if there is jointly held debt, the surviving individual will be held liable for the outstanding balance. Executors should understand what should and should not be paid in case they must deal with collection agencies.

Individuals may think more about passing assets on to loved ones rather than debts, but debt planning may have a serious influence on the execution of an estate. In addition to existing debts, individuals might also consider the cost of funeral and burial expenses and could purchase insurance to cover some of these costs. An attorney could help someone involved in the planning of an estate create the necessary documents for outing its execution.

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