At some point or other, most of us have to come to terms with the fact that we won’t live forever. This may be a morbid subject, but what happens to our unpaid debts when we die? Whether it’s credit card debt, medical bills, or an unpaid mortgage, many people have debt left over when they pass away. At Telco Credit Union, we want you and your family members to feel financially secure and taken care of, especially in the sad case of any relative or friend passing away. When it comes to your finances, we want to provide you with the experiences you’re looking for. If you live or work in Tarboro, Rocky Mount, Greenville, or surrounding areas in North Carolina, check out Telco Credit Union and consider becoming a member.

It’s important to prepare for the worst and to plan ahead so that your financials are taken care of after you’re gone. When someone dies, their assets and debts are converted into what’s called a “legal estate.” An executor (usually a trusted family member, close friend, or attorney) will settle unpaid debts and distribute assets based on the deceased person’s will. 

If someone’s individual debts exceed their assets when they pass, typically, their estate will cover the rest and the remaining debt is written off. In most states, family members aren’t responsible to pay their deceased family member’s debt. Be aware, however, that if a person has a negative net worth when they die, their family may be financially responsible to cover funeral expenses if arrangements are not made in advance. 

It is also important to note that if you have co-signed a loan or jointly own an asset with someone who passes away, you will assume full responsibility or ownership of the situation. Make sure you trust the person you’re co-signing a loan with. 

Encourage your loved ones to build up retirement savings so that they leave behind a positive net worth. In addition, there are a few ways to simplify the probate process so that heirs of the deceased can receive their inheritances without any obstacles. If you plan to leave behind an inheritance, it might be a good idea to add your heir(s) to a joint bank account so that transferring funds can be simple. In the same vein, maintaining joint ownership of real estate can have the same effect. 

Even though this subject may be difficult to think or talk about, it’s important to set yourself and your family members up for financial security after the passing of loved ones. 

If you need financial guidance, we are more than happy to help at Telco Credit Union. Give us a call today! 

 

 

 

 

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