What About Debt and Taxes?
The bulk of your assets will be passed to your beneficiaries, But what if you pass away in debt?
What About Estate Taxes?
The estate tax, sometimes called the "death tax." US estate tax applies to people whose estates are worth more than $5 million. Most estates are not worth that much money.
If your estate might qualify for the tax, speak with an established estate planner and create a Trust. Remember: a $5 million estate doesn't mean that you have $5 million of liquid assets which should create urgency in creating an estate plan.
What happens if you leave behind debt?
Estate law in the U.S. doesn't require your beneficiaries and heirs to pay down your outstanding debt. But that doesn't mean your estate itself will not be required to pay off debts. Creditors have a legal claim on the estate. Large bills or mortgages or other debts (such as to creditors or business partners) have a legal right to your estate. A court may order your assets liquidated to pay off existing debts.
A Trust can help preserve especially important (or sentimental) property from creditors.