If you’re like most people, having debt can feel like the weight of the world on your shoulders. Though you may worry about what will happen the next time you pay your bills, it’s important to consider what will happen to the funds you owe upon your passing. Unfortunately, many are unaware of what will happen to their debt after they die. If this reflects your circumstances, it’s in your best interest to continue reading. The following blog explores what you should know about these matters and why connecting with a Medina, Ohio estate planning lawyer is in your best interest.
What Happens to the Debt of the Deceased?
In Ohio, when someone passes away and they leave behind debt, understanding how these outstanding balances are handled is critical. Generally, your creditors will have six months to file a claim for any funds they are owed. However, it’s not your next of kin that is responsible for making payments – the money owed will come from your estate. As such, the Executor of your estate must submit your death certificate to the court and notify all creditors of the deceased. If the creditors do not file a claim in a timely manner, the creditor loses the right to pursue the owed debt.
It’s important to understand that secured debts, meaning debts backed by property as collateral, can be seized if the balance remains outstanding. For example, if there is a mortgage on your home, it can be foreclosed unless the Beneficiary who inherits the home takes over the payment. The same goes for vehicles that have been financed through an auto lender.
Do I Have Any Legal Options?
If you are worried about your estate following your passing due to the debt you have accumulated, it’s important to understand that you have legal options to provide assets to your family. Generally, certain assets, like life insurance policies and 401(k)s are protected from creditors.
In addition, you may want to create a Trust Fund to help provide for your loved ones after your death. By creating an irrevocable trust, you are transferring assets out of your control to the ownership of the Trustee. Because the assets are no longer in your control, they are not considered part of your estate. As such, you can protect assets from creditors by establishing a Trust Fund.
Generally, the best option to help protect your Beneficiaries upon your passing is to meet with an experienced attorney who can help you explore your legal options. They can examine your unique circumstances to provide the best and most specific legal advice for your needs.
At Krause Law, we understand how overwhelming estate planning can be, especially when you have a considerable amount of debt to take into consideration. That’s why our firm will do everything in our power to help you understand your legal options so you can feel confident in the decision you make for your family. Contact us today to learn how we can assist you in these times.
