When it comes to estate planning in Derry, it is important for you to take into consideration your debts. You may be under the assumption that they will go away when you die, but they do not. Unpaid debts pass on to your estate. If you do not want your creditors to siphon away your loved one’s inheritances and your legacy, you may be able to prevent this by being a little more thorough with your estate plans.
Keep in mind that any debts that have joint owners or cosigners may not pass right to your estate. They become the responsibility of the joint owner or cosigner of the account. This may lighten some of the debts that your estate will owe upon your death, but it does not absolve them all. Other debts may become the responsibility of your surviving spouse. Review the following things you can do to make your estate creditor-proof.
Safeguard life insurance proceeds
The death benefit and cash value of your life insurance policies are inaccessible to creditors until they are dispersed. Once the policies are cashed in, they are open to attack from creditors and ex-spouses. One way to circumvent any claims they may have to those funds is to create an irrevocable life trust to protect them. You can further beef up the protection by adding a spendthrift clause to prevent the proceeds from passing on to anyone other than your beneficiaries.
Properly title your account owners and beneficiaries
Review your beneficiaries and joint account owners’ designation often. If you forget to add someone as a joint account owner or beneficiary to your accounts, when you die, the person you leave them to may have to pay off your debts first with them before keeping the remaining funds for themselves.
There are many loopholes in estate planning that can trip you up if you are not careful or thorough. Protect your loved one’s inheritances and your estate by making provisions in your estate plans to keep creditors from having access to them.