If you don’t pay them off, your heirs will. That may not be the legacy you have in mind.
Some things don’t disappear when you die, and that includes your credit card debt. It doesn’t matter whether you have the high status titanium card or a simple green one, your estate will end up having to foot the bill.
The good news is that your heirs are not responsible for paying the bill. It just means that these types of liabilities come off the top—or are satisfied first—before any bequests or remaining assets are distributed to heirs.
In other words, Newsday’s recent article “Help your heirs avoid having to pay your credit card debt” says, your heirs will pay those cards off indirectly, because money that comes out of the estate means less for them.
In a time of sadness and stress, no family wants to talk to creditors looking to get paid for delinquent balances.
There are a few ways to avoid this situation and to lessen the burden on your family. Let’s look at ways to skip the situation altogether.
Pay off the debt. Of course, since you never know when you might die, keep on top of your expenses. It’s always a best practice. Remember, less or no debt means less or no headaches and frustration for your heirs.
If you do have unpaid debt, be sure your family is familiar with the laws, so they won’t fall victim to dishonest collections agencies and harassing bill collectors.
Make it easy on your heirs. Begin the process with a legally valid will that designates an executor of your estate. That way, there won’t be any arguments or questions about who will be in charge of handling the estate. This way no one has to jump through extra hoops and waste their time and energy to gain access to the estate.
Meet with an estate planning attorney. While you are working on your estate plan, bring a complete record of your finances, including all of your credit card, investment and retirement accounts. Include your mortgage, college and car loans, or any other debts you have. This complete list will be useful in determining what strategies are needed for your estate plan. Don’t forget to let the executor of your estate know where they can find this information, rather than sending them on a scavenger hunt while they are mourning your loss.
Reference: Newsday (July 14, 2019) “Help your heirs avoid having to pay your credit card debt”