Carstens Financial Group
  • Home
  • About Us
    • Pro-Am
  • Services
    • Retirement Income Strategies
    • Tax-Efficient Solutions
    • Investment Planning
    • Long-Term Care
    • Estate Preservation
    • Securities
  • Resources
  • Blog
  • Contact

Blog

Estate Debt: How to Protect Your Heirs

10/10/2018

0 Comments

 
Picture

​As you approach retirement and the later stages of your life, you may be considering your legacy and how you will pass your assets on to your loved ones. Perhaps you want to fund your grandchildren’s education or help your grown children get started on their retirement nest egg. Maybe you have assets that hold sentimental value that you would like to distribute to specific relatives.
 
To achieve these goals, it’s helpful to have an estate plan in place. Your estate plan should prioritize your objectives and offer a strategy. It should also identify risks and challenges, such as taxes, end-of-life costs and even probate expenses.
 
One risk you may want to consider is debt. Many retirees try to minimize debt before they end their career. However, that’s not always possible. Unexpected costs always arise, even in retirement. You could have credit card debt, mortgages, medical bills and more.
 
It’s possible that your debt could impact the amount of assets that are distributed to your heirs. When you pass away, many of your assets will likely pass through a process called probate. That’s the legal process for settling an estate, and it often includes notifying heirs, liquidating assets, distributing inheritances and other tasks.
 
One step in probate is paying final debts. Your creditors could actually file liens and judgments against your estate, tying up your assets and restricting the distribution of your funds.
 
Fortunately, there are steps you can take to minimize the burden of your debt and protect your legacy. Below are three steps to consider. If you have debt and are worried about its impact on your estate, consider implementing these action items in your estate plan.

Reduce debt while you’re alive.
 
Perhaps the most effective way to limit the impact of debt on your estate is to take steps to reduce your debt while you’re alive. For example, if you have credit card debt, consider developing a strategy to pay it off. If you owe back taxes and penalties to the IRS, contact the agency to negotiate a payoff plan.
 
Also, think about loans on which you may be a co-signer. For example, did you co-sign your children’s student loans? If so, the lender could demand that the balance be paid after your death. You may want to work with your child and the lender to see if you can be removed as a co-signer so the balance doesn’t hold up your estate distribution.

Create liquidity for your estate.
 
Sometimes it’s not the debt that causes estate problems, but rather the illiquidity in the estate. An individual may pass away with medical debt, credit card debt or other loans. The person’s assets may be illiquid property, like real estate or collectibles. There may be few liquid assets available, such as cash or investments.

In these cases, the estate executor may be forced to sell assets to generate cash to pay the debt. That can be especially difficult for heirs if the assets have sentimental value. You can minimize this risk by creating liquidity for your estate. Consider using life insurance as a tool to leave cash for your heirs. If you can’t qualify for life insurance, work to create a reserve of cash.

Protect your assets from creditors.
 
You also may want to utilize tools that offer some protection against creditor action. Many of these tools are beneficiary-designated products such as life insurance, annuities, IRAs and trusts. These types of assets flow directly to the named beneficiaries without going through probate. You may want to maximize the assets in these accounts so your heirs can receive their distributions quickly, without waiting for your executor to settle outstanding debts.
 
Ready to protect your loved ones? Let’s talk about it. Contact us today at Carstens Financial Group. We can help you analyze your needs and create a strategy. Let’s connect soon and start the conversation.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18086 – 2018/10/1

0 Comments

Your comment will be posted after it is approved.


Leave a Reply.

    Kirt Carstens

    Carstens Financial Group focuses on providing comprehensive asset management, estate planning and life insurance solutions. Allow us to help you secure your financial future.

    Archives

    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014

    Categories

    All
    2020
    CARES Act
    COVID
    Economic Update
    Election
    Employer Plans
    Estate Planning
    Fed Chairman
    Financial Planning
    Fourth Quarter
    FRA
    Full Retirement Age
    Funding
    GDP
    Health Care
    Health Savings Account
    HSA
    Income
    Inflation
    Insurance
    Managing Medical Expenses
    Medicare
    Planning
    Portfolio
    Retirement
    Retirement Home
    Retirement Planning
    Retirement Strategy
    Risk
    Risk Tolerance
    Say Yes
    Social Security
    Stimulus
    Stock Market
    Supplemental Retirement Income
    Tax Planning
    The Market
    Working In Retirement
    Working Part Time
    Yes

    RSS Feed

Kirt Carstens, CLU, ChFC
Investment Advisor Representative
P: (712) 332-5960
F: (712) 332-5391

605 Hwy 71 S
Arnolds Park, IA 51331
Get Directions

Home     About Us     Services     Resources     Blog     Contact

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation.

Securities and Advisory Services offered through CreativeOne Securities, LLC Member FINRA/SIPC and an Investment Advisor.  Carstens Financial Group and CreativeOne Securities, LLC are not affiliated.
​
This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional.  The statements and opinions expressed are those of the author and are subject to change at any time.  All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only.  It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. 

Check the background of an investment professional.  |  Privacy Policy
  • Home
  • About Us
    • Pro-Am
  • Services
    • Retirement Income Strategies
    • Tax-Efficient Solutions
    • Investment Planning
    • Long-Term Care
    • Estate Preservation
    • Securities
  • Resources
  • Blog
  • Contact