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Photo of Professionals at Ezell Law Firm, LLC
More Than 40 Years Of Legal Service To The Baton Rouge Region

Addressing debt in estate planning

On Behalf of | Mar 18, 2024 | Estate Planning |

Baton Rouge Legal Blog

As people age, they may begin to take estate planning seriously. Planning involves examining assets and liabilities. Estate planners in Louisiana might find that debt negatively impacts their intended plans. Older people may have more serious concerns because they may wonder how to deal with the debt situation in relation to estate planning.

Debt and aging

Several factors contribute to debt for older persons. When an older person no longer works and relies on a pension or social security, they could be limited by a fixed income. A lack of savings further harms their ability to make ends meet. However, the person could own a home and other illiquid assets. When engaging in estate planning, the individual may learn that probate typically involves settling estate debts. If the beneficiaries can pay the debts, they may receive the bequeathed property quickly. Others may borrow to pay the debt and then sell the received property to recoup their expenses.

Estate planners might help beneficiaries by giving them insights into how probate works. Including beneficiaries in the estate planning information loop could be a good idea.

Debt and estate planning

Estate planning could involve more than writing a will or taking steps to devise a trust. The process may involve reducing debt so that the obligations have less of an impact on beneficiaries. Becoming involved with estate planning earlier in life could allow someone to proactively budget things so that avoidable debt does not become a problem. However, debt may accumulate because of unforeseen situations.

Compiling accurate records of all debts and assets may be advisable. Creating a thorough file of financial information, including bank accounts, credit card accounts, and illiquid assets that could be sold for cash, might prove valuable to beneficiaries when they deal with probate.