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Use Your Will to Dictate How to Pay Your Debts
- October 27th, 2017
The main purpose of a will is to direct where your assets will go after you die, but it can also be used to instruct your heirs how to pay your debts. While generally heirs cannot inherit debt, debt can reduce what they receive. Spelling out how debt should be paid can help your heirs.
If someone dies with outstanding debt, the executor is responsible for making sure those debts are paid. This may require selling assets that you would like to leave to specific heirs. There are two types of debts you might leave behind:
- Secured debt is debt that is attached to a piece of property or an asset, such as a car loan or a mortgage.
- Unsecured debt is any debt that isn't backed by an underlying asset, such as credit card debt or medical bills.
When you leave an asset that has debt attached to it to your heirs, the debt stays on the property. Your heirs can either continue to pay on the debt or sell the property to pay off the debt. If you believe this would cause a burden for your heirs, you can leave them assets in your will specifically designated to pay off the debt.
Local Elder Law Attorneys in Ashburn, VA
Farr Law Firm
In practice since 1987, Fairfax Attorney Evan Farr is widely recognized as one of the leading Elder Law, Estate Planning, and Specials Needs attorneys in Virginia and one of foremost experts in the Country in the field of Medicaid Asset Protection and related Trusts. Evan Farr has been quoted or cited as an expert by n...
Hale Ball Carlson Baumgartner Murphy PLC
Attorney Samantha Simmons Fredieu is an associate at Hale Ball. Ms. Fredieu graduated magna cum laude from Vermont Law School where she was the symposium editor on the Vermont Law Review, a production editor on the Vermont Journal of Environmental Law, and a member of the Moot Court Advisory Board. She has clerked for...
With unsecured debt, although your heirs will not have to pay off the debt personally, the executor will have to pay the debt using estate assets. You can specify in your will which assets to use to pay these debts. For example, suppose you have a valuable collectible that you want one of your heirs to have. You can specify that the executor use assets in your bank account to pay any debts before selling the collectible. And if you want to leave liquid assets, like a bank account, CD, or stocks to an heir, you should designate in your will what you would like your executor to use instead to satisfy debts.
Not everyone needs to spell out how to pay debt in a will. If your debt is negligible or your entire estate is going to just one or two people, it may not be necessary. Contact your attorney to come up with a plan for handling your debts.
Last Modified: 10/27/2017