What to Do When You Inherit Your Parents' House

What to Do When You Inherit Your Parents’ House

Advice for selling it, moving in or renting it out  used 6-17-20

By Craig Venezia July 1, 2019

Boomers stand to inherit upwards of $27 trillion over the next four decades, according to The Center of Wealth and Philanthropy at Boston College, and a portion of that includes the house their parents lived in.

But when that house becomes yours, figuring out what to do with it can present financial and emotional issues. If your siblings are involved, things can get even trickier.

“There are three basic paths you can take,” says Bruno Graziano, a senior estate planning analyst with Wolters Kluwer, CCH. “Sell the house, move into it, or rent it out.”

Here’s advice for each scenario:

 Selling Your Parent’s House

A few years back, when Ken Levy, 70, and his brother inherited their mom’s condominium in Dallas, Texas, they pretty much knew they’d sell it.

Since the condo had appreciated in value during the nearly 10 years their mom owned it, the Levy brothers looked at recent comparable sales to price it right and to agree on a minimum amount they’d accept.

In spite of the appreciation, the Levys knew they’d most likely avoid owing capital gains taxes on the sale. “Beneficiaries receive a stepped-up basis, which is the property’s fair market value at the date of the parent’s death,” says Graziano. “When you sell, you only pay taxes on gains over that basis.”

Looking at comps and deciding on a minimum price, as the Levys did, are good ideas if you plan to sell your parent’s home. You’ll also want to make sure the homeowner’s insurance is paid up and the estate or trust is named as the insured, in case anything happens to the home between your parent’s death and the sale.

The same is true of mortgage payments (if any), property taxes and utility bills.

Once the property sells, you’ll need to pay any remaining mortgage balance along with any real estate commissions, transfer taxes and other closing costs.

Moving Into Your Parent’s House

To continue reading, please go to the original article here:

https://www.nextavenue.org/what-do-when-you-inherit-your-parents-house/

"Your Money & Your Affairs Post-RV"

"Your Money & Your Affairs Post-RV"

From Recaps Archives

By  FXStrategist at WSOMN

As a former financial planner and market strategist (equities, derivatives, FX, risk management), I would like to share my current thinking concerning managing one's money and affairs post RV.

THESE ARE ONLY MY OPINIONS and contemporary CONCLUSIONS! I am not a licensed investment adviser and I am an amateur student of NESARA and its consequences.

This is not professional advice but rather my conclusions and thoughts developed over months of research, strategizing and thinking with my small group, and planning and consulting with existing banking and investment contacts. Please take this all as one person's posture as of this moment in time. I hope it helps in even a small way.

 ...

WHITE GLOVE TREATMENT:

Bank wealth managers will not only advise you but implement virtually everything you will need. That includes security (personal, home, digital) and virtually anything you need. White glove.

CHANGING INVESTMENT ENVIRONMENT:

We won’t know until we see the timing of NESARA about taxes or investments. Were NESARA to be implemented any time soon after we exchange, it will change the landscape dramatically rendering many recommendations emanating from THIS reality either inappropriate or riskier than before. I will avoid the securities markets, including overnight short-term instruments in the days after exchanging and annuities (covered in another point below).

NESARA = NEW RULES:

NESARA and the new technologies (energy, health) will change corporate structures dramatically. Entire industries may become obsolete with the sudden and welcome emergence of new health and free energy technologies. The new paradigm masters will not let you lose whatever you currently have invested in those markets, but don’t rush into them post RV. Wait and see. You’ll have time to observe and gauge.

TAX AND LEGAL:

Tax and legal advice may also change dramatically with NESARA. Professionals will have to receive all new training and education. I look for flexible minds who can grasp the new paradigm and learn the new rules quickly. The bank will have people on hand for you until you find someone you like.

FAMILY OFFICES:

Do ask about family offices. There are individual and multi-family offices. You can join existing family offices or form your own. Your wealth manager will know about these. There are minimums ($25-$50 million?), so check it out with your own Wealth Managers. No need to learn all about them now before the RV. So don’t think you have to educate yourselves right this minute

PRIVATE BANKS:

Look into private banks. They are already predisposed to handling the UHNW (Ultra High Net Worth) individual and have dealt with most of your impending needs and questions multiple times. They hold your hands and spoon feed you. You have no idea how beautifully you will be cared for.

GOLD:

If you consider gold and silver, get the advice of an expert. I have already received an investment recommendation from such a resource that is also knowledgeable about NESARA. Their recommendations are specific and market savvy and even counter-intuitive. Inform yourselves. 

ANNUITIES:

Possibly no longer the panacea they've once been. They have been recommended as safe insurance products here and elsewhere by non-investment professionals; but the insurance companies can afford those handsome tax-deferred returns how?

By investing your money in the securities markets while counting on insurance contract premiums as backup. They used to be considered very safe tax-deferred investments that never defaulted. Will they still be? Will insurance companies’ premiums and the underlying markets continue to exist the way they do now? I do not know, but I will not consider these vehicles.

BANK RETURNS:

You won’t really need annuities anyway. Banks will be offering you +/- 10% for time deposits (ask for more that you are offered — the banks will receive 20-30 times the dollars they "give you" for your exchange when they turn around and sell your currency back, so they’ve got plenty of headroom). And if NESARA passes (maybe weeks after our RV?), taxes will be moot so tax-deferred income (usually lower) will no longer be a goal.

EXCHANGE EVENT TAXES:

Keep tax money on hand (how hard will that be?) until we know for sure the tax treatment of our exchange. NESARA will obviate today’s high capital gains or investment income rates. But there could be a special tax — who knows? Be conservative until you know.

SAFE "NEW" BANKS:

The new banks will not be run the same way as the existing banks. Overnight, the evil stepmothers go away and will be replaced by fairy godmothers. They will be new-fashioned, legal depository institutions, and loans and other activities will not entail risky, usurious, or profit-driven behaviors.

Interest is illegal (now) and will go away (NESARA). The banks will make plenty of money in this exchange and will be financially robust and designed to serve us. Who knows what they’ll actually look like? It will not be the way they look now.

THE "RIGHT" RATE FOR YOU:

Regarding Josef’s wise counsel about how much to negotiate for in terms of available rates, here are my thoughts. Most of us bought amounts of currency that we could afford and which would give us returns we felt fit our personal profiles, goals, and life situations.

That changed over the past few months as rates of exchange have skyrocketed as much as ten times (or more) our original expectations. Some have continued to purchase highly leveraged currencies that have also exploded in terms of exchange rates.

A millionaire has become a ten-millionaire; a ten-millionaire has become a hundred-millionaire, &c. This does change your profile in the post-RV world.

How do you even give that kind of money away to the people and projects you know about? What if you’re not well-connected in the investment world? What if you don’t know how to manage projects on your own to ensure success and to make sure your desired outcomes are indeed taking place?

VISION GIVING:

As I posed this entire discussion via Josef (from a WingIt call) to my small group, I saw a “Housing First” video that freed up my own thinking. Big real estate projects like housing or new institutions — to help the homeless, the disenfranchised, the mentally ill, the co-morbidly ill (physical & medical), people with substance problems, single parents, poor children, people in crisis — need big funding.

 The world is in need of huge infrastructure improvements and healing from pollution and earthly degradation. Projects such as these may seem beyond you to design, fund, and run. No need. You will be able to find and fund these projects via the family office system and new communities of project-sharing.

Other people can put together and run new projects that don’t even exist now, including your own pet ideas; and through your OWN NEW NETWORK of professional advisors, you can tag along.

Projects being proposed and funded at Landa China and Zap can give you a taste of what needs to be done in the world. You will not have to wake up at night and worry about how to distribute your funds. Projects will come to you. You will have the joy of directing your funds to projects you care about in your hearts without tossing and turning and going it alone at the drawing board.

INITIAL ACTIONS:

Whatever you worry or think about in this sunset of the old paradigm may not even exist in the new paradigm, so don't go nuts trying to figure it all out now.

Make your exchanges, receive good guidance concerning the construction of your account arrays at the bank, ask about family offices and professional (tax and legal) counsellors (flexible thinkers), park your money (probably just in the “new” bank for the immediate future), and give yourselves time for things to unfold.

The interest you’ll be earning immediately will pay for your wants, needs, and desires. Satisfy them first, and then help others. We are meant to be fulfilled.

FULFILLMENT FIRST:

Like the oxygen mask in the plane, put yours on first and then attend to your "children." Our fulfillment is a prerequisite to being in the very best energy to best relieve and fulfill others — and the world.

Learn how to give and how not to give (see Oprah and Elizabeth Gilbert, and consult your team). Giving large amounts of money outright to people can have unintended negative ripple effects.

Pay their bills, give them “gift amounts” ($14,000 per gift tax free to you and them, at least for now) that will make sense to them, and buy yourself some time to set up trusts, arrange for anonymity, get your own security in place, and learn how to help in appropriate and constructive ways.

No need to figure it out now. “Your people” will help and guide you, as will our ongoing community of sharing and comparing notes!

THERE ARE NO MISTAKES:

What will happen is what is intended to happen FOR you. Quell your fear and trepidation. Embrace and enjoy the ride. You’ll be helped all along the way. You simply haven't had these privileges extended to you before so, again, you have no idea how beautifully you will be taken care of.

RELAX!

You’re prepared. You’re ready. You’ve done it. The relief you feel may wipe you out. Get used to your new status, take a vacation, buy your new home and car, take care of your health and that of others, address emergencies, and enjoy!

Once you’re in the new realm of wealth and communing with other similarly blessed people, you will adjust to your new mindset along with the beautiful intentions you each have to help the world. We will be here for one another.

Go get ‘em! I say take as much money as you can. Let your professionals smooth the way and do the work. You’re “Executive Producers,” providing the funding for the projects that others will propose, shape, and run.

There is nothing to fear, and there is no way to lose.

And, of course, if this all makes your heart palpitate and you are feeling the lower market rates are more your size, by all means, trust your inner guidance, your “withinity.” Your “withinity” — your higher self, your divine guidance, your God — is your true and constant partner and ultimate arbiter of all decisions.

Go into your heart. Be still and know you are God.Blessings to all of you, and gratitude for your intel, encouragements, and camaraderie!

Blessings to all of you, and gratitude for your intel, encouragements, and camaraderie!

Not All Income Is Created Equal

Not All Income Is Created Equal

One of the most common financial pitfalls people make is thinking that all income is created equal. It’s an easy mistake to make; after all, a dollar is a dollar . . . right?

Well, that’s what I thought. What completely re-shaped how I spend my time and energy, though, is learning that one dollar can actually be worth less than another, simply based on how it's produced.

It’s a tricky concept to explain, so let’s jump right into some examples.

Is Your Income Being Devalued?

One of the best ways to illustrate this is to look at the 2020 tax bracket.

Credit: Nerdwallet

At its most basic level, this graphic shows that every dollar earned above $518,401 (when single) is taxed 2% higher than the prior bracket.

In other words, if you earn more than $518,401 per year, every additional dollar is worth 2% less than in the lower bracket.

Make sense?

This not only devalues your money, it devalues your time. After all, if you’re getting paid a certain wage per hour, your time is now worth 2% less at the highest bracket.

The point of all of this is to say that you need to figure out where the dollars are worth the most, and how to use the minimum amount of time and effort to create those dollars. That’s how you leverage your time for maximal benefit.

To put it another way, would you rather spend an hour to earn $250, taxed at 35%, or spend that same hour earning the same $250, but taxed at 10%?

The tax amount makes a huge difference–especially when we’re talking about numbers much greater than $250 (as we all know, it’s not what you earn that matters. It’s what you keep).

Income and the Cash Flow Quadrants

In order to put this all into perspective, let’s take a moment to revisit the CashFlow Quadrant, concept presented by Robert Kiyosaki in his book of the same name.

 To continue reading, please go to the original article here:

https://passiveincomemd.com/not-all-income-is-created-equal/

How Are You Expected to Fix Your Finances By Yourself?

 How Are You Expected to Fix Your Finances By Yourself?

Financial Literacy  By Michael Dinich

No one is born with financial intelligence.

It is something that is trained and learned through your parents, providing vital information or by making one too many financial mistakes in your teens and early twenties.

When faced with the prospect of ruining your finances, from debilitating overdraft fees to terrible credit that doesn't even allow you to purchase a cell phone plan, it can feel like you will never get out of this financial hole.

This isn't the case, though; everyone can fix their finances, and they don't need to do it alone.

Work With a Professional

You can read all the available advice online that you can find, but even the most concise guidance will not hold a candle to a professional. Anyone severely struggling with money and budgeting should consider seeking help from a Financial Service Provider who can give them invaluable suggestions on how they can improve their situation.

These professionals have the experience to provide information for a wide range of scenarios. They may have already seen your situation, or something close to it, before, and so they already know the best action to take. They will need to be strict with you, and they won't accept any nonsense, so you need to demonstrate you are dedicated to improving your finances.

Find Someone to Hold You Accountable

 To continue reading, please go to the original article here:

https://yourmoneygeek.com/how-are-you-expected-to-fix-your-finances-by-yourself/

How is Money Created? – Everything You Need to Know

How is Money Created? – Everything You Need to Know

ColdFusion  2.4M subscribers  401,865 views •Jun 8, 2020

With trillions of dollars being printed around the world, it's time we take a look into how money is created.

How much is a Trillion Dollars? Let's put it this way:

1 Million Seconds =12 Days

1 Billion Seconds = 32 Years

1 Trillion Seconds = 32,000 Years

https://www.youtube.com/watch?v=mzoX7zEZ6h4&feature=share&fbclid=IwAR1SLcPsiU7CpNDzQqbAsgIg2LWrYBgZMXuG0a1lb_EAKpfTp562h7N962k

Activate Kruger  1 week ago  “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”  Henry Ford

Meldridge Reed Jr  3 days ago  You should read "The Accidental Superpower", " The Absent Superpower" and "Disunited Nations" by Peter Zeihan.

Cicero Araujo  6 days ago  The monopoly of the dollar is a crime against humanity.

Eric Chandler  1 week ago (edited)  The difference between 1 and 1 trillion is 12 keystrokes.

Brogan T  6 days ago  “You can print money but you can’t print wealth”

Hans Sarpei  6 days ago  “How is money created?”  Printer goes Brrrrrrrrrrrrrrrrr

Who Controls All of Our Money? 

ColdFusion  2.4M subscribers 4,676,822 views•Jun 11, 2017  

 https://www.youtube.com/watch?v=mQUhJTxK5mA

Who Controls All of Our Money? - A Quick Follow Up

ColdFusion  2.4M subscribers  332,114 views•Jun 15, 2017   

https://www.youtube.com/watch?v=6bLhGXtbZDg

How Many Bank Accounts Should You Have?

How Many Bank Accounts Should You Have? [The Simple Guide]

As you build your emergency fund and savings, a question you might ask yourself is, “How many bank accounts should I have?” However, for most people having one bank account is a common option and there is no thought in really expanding to other accounts.

Personally, it never crossed my mind when I was first focusing more on my personal finances. But as I grew my savings and investments, I did start thinking about it more and if additional accounts were the right move. Now the majority of people really do not need more than one institution that they do banking with. And the common choice to make is to have a checking account and savings account at one bank of your choosing.

But if you’re wondering how many bank accounts should you have, some pros and cons, and the options you have — then stick with me below!

***

Should You Keep All Your Money in One Bank?

When it comes to bank accounts, you may consider the most convenient option to be keeping all your money in one bank. Keeping all your money in one bank may be simpler, but depending on your financial circumstances, it may not be the best.

For example, a second bank account may offer you a better interest rate which would allow your money to beat inflation long term. And for this reason, deciding how many bank accounts you should have does require some thought process.

Here’s a quick breakdown of the pros of having one bank and multiple. We’ll explore these a bit more in the next sections.

Managing accounts in one bank:

Easy to manage and maintain from one institution instead of multiple

A bit more protected from identity theft and potential fraud

Having more than one bank:

Diversifying your money for budgeting and spending needs

Better banking options pending your needs

Higher interest rates in some savings accounts

Testing out other banks services and perks

How Many Bank Accounts Should You Have?


To continue reading, please go to the original article here:

https://investedwallet.com/how-many-bank-accounts/

Money Mentor: A Trusted Financial Companion

Money Mentor: A Trusted Financial Companion

June 12, 2020 by One Frugal Girl

Where do you go when you need to talk about money? Do you have a money mentor in your life? A trusted source who can listen to your financial questions and provide you with monetary guidance.

It doesn’t matter if you are financially savvy or have absolutely no idea how to manage your money. We all need a way to bounce ideas around with someone who is willing to listen. A money mentor allows us to talk about money matters and financial decisions without judgment or worry.

Money Mentor

What is a money mentor? A money mentor is a friend, family member, or coworker who openly talks about money. A financial companion who shares ideas about money management, budgeting, spending, and saving.

A money mentor shares their knowledge and experience. They help us think through difficult financial topics and questions. By learning about financial experiences we can make better, more informed decisions.

A money mentor can act as a sounding board for questions like:

Does it make sense to save for retirement while paying off my student loans?

How much should I save for a downpayment on my first house?

What is the best way to ask for a raise?

Money mentors are not trained, financial advisors. They do not charge fees. They are simply close friends, companions, and financial enthusiasts who allow us to think through money matters with ease.

Talking About Money with a Money Mentor

Very few of us feel 100% confident and comfortable with our financial decisions. We worry about spending, saving, debt, and retirement, but we rarely discuss our financial concerns. As long as money remains a taboo topic most of us continue to remain silent about financial matters.

Unfortunately, closing the door on financial conversations forces us to make vital decisions in the dark. We take our best guesses rather than openly discussing our thoughts and ideas with those who can guide us.

Wouldn’t it make more sense to talk to a trusted source about our financial concerns?

Easing Financial Anxieties with a Money Mentor

Why don’t we openly talk about money? Why is money still a taboo topic? Discussing financial topics can be extremely difficult, downright scary, or absolutely anxiety-inducing. Unfortunately, we live in a world where many people equate net worth with self-worth.

This can lead many of us to feel embarrassed by debt, low salaries, or bad financial decisions we’ve made. When we discuss financial figures we open ourselves up for comparison. We worry that others will view us as less important or less capable. But it is this shame and embarrassment that leads us to make financial mistakes in the first place. When we are ashamed to speak up we cannot learn, grow, or do better.

To continue reading, please go to the original article here:

https://www.onefrugalgirl.com/2020/06/money-mentor/

When Is an Emergency Loan a Good Option?

When Is an Emergency Loan a Good Option?

Trent Hamm, Jun 9, 2020 Founder of The Simple Dollar

Sometimes emergencies happen in life, and the best advice I have for everyone is to plan as though an emergency will happen sooner rather than later. Start building an emergency fund now, so that you have cash when things go awry and you really need it.

That’s great advice, of course, but it’s not helpful for someone facing an emergency right this moment before they even have the opportunity to start building their own emergency fund. The reality is that we live in a time with high unemployment, and even before that, four out of five Americans lived paycheck to paycheck.

The best long term solution is to prepare for emergencies, but what are the options in the short term?

What about credit cards?

In many situations like these, people turn to credit cards. This solution offers the big advantage of being incredibly convenient: you just swipe your card or type in your number and the emergency is fixed, for now.

That big advantage comes paired with some disadvantages, however.

First of all, credit cards don’t work in all emergencies. They don’t help in identity theft situations, in situations where you can’t solve the problem with a credit card or when the credit network is unavailable (like after a natural disaster). They also don’t help if your card is already maxed out, or if you have poor credit and don’t have one.

Second, credit cards often come with very high interest rates. There are ways to mitigate this with zero interest balance transfer offers, but it’s still a difficulty to deal with, and if you don’t have strong credit, that option may not be available and you’re just stuck paying a very high interest rate.

In the end, credit cards are great for smaller emergencies where you can pay it off within a month or two and not accrue much interest on the card. They’re not good for large emergencies, and there are many situations where credit cards may be an unavailable option.

 To continue reading, please go to the original article here:

https://www.thesimpledollar.com/loans/blog/when-is-an-emergency-loan-a-good-option/

3 Things You Should Consider Before Selling Your House for Cash

3 Things You Should Consider Before Selling Your House for Cash

By Toni Husbands on 20 February 20190 comments

In August of 2017, an investor called us and offered to buy our condo for cash. We didn't have it listed for sale. The condo was in great condition, the rent we charged covered expenses, and it was in a very nice area that consistently attracted stable tenants. My husband and I took about five minutes to confer before deciding to accept the offer.

The offer was cash. We estimated it was about $10,000 less than we might have made through a traditional sale. After accounting for realtor commissions, taxes, and the time required to sell our condo; we felt the convenience of an as-is cash sale was worth it. The closing took less than two weeks. By the end of August, we had an extra $35,000 in the bank.

Selling your house for cash can be a dream come true. In these cases, investors are looking for a quick transaction. They aren't generally concerned with repairs. Real estate agents are not involved, so the cost of a broker's commission is waived. In my case, the inspection walkthrough was merely a formality.

The as-is cash closing was also a piece of cake. The investors who contacted us were the building's property managers. They already owned other rental units in the building, so we were able to verify their legitimacy quickly.

However, all that glitters is not gold. This industry is rife with scammers looking to swindle you, and you should be careful working with people who advertise a service to buy houses for cash on traditional media sources, online, or even street corners (we've all seen the signs nailed to light posts).

If you're considering selling your house for cash to an investor, make sure you do your homework, and back away if you detect any of the following red flags.

It's a foreign investor

People who contact you from foreign countries offering to buy your house sight unseen should set off alarm bells. In some cases, scammers submit legal-looking documents or send you to websites that look professional. They might say they're moving to another country for work.

To continue reading, please go to the original article here:

https://www.wisebread.com/3-things-you-should-consider-before-selling-your-house-for-cash

How Becoming the Breadwinner Changed My Perspective on Money

How Becoming the Breadwinner Changed My Perspective on Money

By Sarah Li Cain — Apr 14, 2020

My marriage has always been equal with regard to decision-making. That’s why it pains me to admit how much I relied on my husband to handle the paperwork for our finances a few years ago.

Maybe it’s because I was a Canadian living in the States. Perhaps it was impostor syndrome.

Whatever the reason, I thought as long as my husband had a sizable life insurance policy, that was all that mattered. (What is life insurance?)

I’d quit my job as a teacher when we moved and wasn’t exactly contributing to the household finances. I thought life insurance was for those who were earning a regular salary (like my husband) and there were others who would need the payout (like me).

Sure, I was earning a bit of side hustle income as a freelance writer, but at that point it was barely enough to pay for childcare.

Then my career as a freelancer took off and I surpassed my husband’s income, making more than twice his take home pay! My earnings flowed toward the mortgage, extra house payments, retirement savings and our son’s future college expenses.

This new reality forced me to think about what would happen if I were gone. Could my husband afford the mortgage without my income? Could he retire comfortably without my future financial contributions? What would happen to my son’s college fund if I weren’t there?

The shift to being a breadwinner forced me to stop being so scared about tackling my estate planning. After all, I didn’t want to leave my family in a financial mess if I were to pass away. Or worse, if my husband and I both passed away and my young son was left to fend for himself.

I was still nervous, but my husband and I got our paperwork in order. It was way more emotional than anticipated (especially when it came to deciding on guardianship) but sorting out our paperwork ended up being invaluable.

Deciding on a Life Insurance Policy

I was still pondering how my role as a breadwinner would change our family dynamics when one of my friend’s relatives suddenly passed away. Watching my friend grieve was gut-wrenching.

Piling complications on top of grief, this relative’s surviving spouse couldn't afford the funeral costs, and Social Security wasn’t enough to cover her living expenses. This relative had to beg family for financial help.

My friend and I chatted for a good while about how we wouldn’t want our spouses to be in the same situation. This convinced me to pick a life insurance policy that reflected the fact I am contributing so much financially. I wanted to ensure that the payout would more than cover our mortgage and our son’s college expenses. Full-time childcare isn’t exactly cheap so I wanted to make sure there were enough funds to cover that amount.

To continue reading, please go to the original article here:

https://meetfabric.com/blog/how-becoming-the-breadwinner-changed-my-perspective-on-money

How Unpaid Debt Is Handled When A Person Dies

How Unpaid Debt Is Handled When A Person Dies

May 28 2020 Sarah O’Brien@SARAHTGOBRIEN

Key Points

*Creditors generally try to collect what’s owed to them by going after the decedent’s estate during a process called probate.

*There are instances, however, where the surviving spouse, or another heir, may be legally responsible.

*Some assets don’t count as part of a person’s estate for probate purposes.

It’s not unusual for a person to pass away and leave behind some unpaid debt.

For the heirs — typically the surviving spouse or children — the question often is what, exactly, happens to those obligations. The answer: It depends on both the type of debt and the laws of the state.

A person’s assets — no matter how meager or massive — become their “estate” at death. That includes their financial accounts, possessions and real estate. And, generally speaking, it’s the estate that creditors go after when they try to collect money that they’re owed.

 “Fortunately for surviving spouses or other beneficiaries, in most cases that debt isn’t something they’d be responsible for,” said certified financial planner Shon Anderson, president of Anderson Financial Strategies in Dayton, Ohio.

However, there are some exceptions.

First, though, some basics.

The process of paying off all your debt after your death and then distributing any remaining assets from your estate to heirs is called probate. Each state has its own laws governing how long creditors have to make a claim against the estate during that time. In some places it’s a few months. In other states, the process can last a couple of years.

Each state also has its own set of rules for prioritizing debt that should be paid from the estate, said Steven Mignogna, a fellow with the American College of Trust and Estate Counsel.

“In most states, funeral expenses take priority, then the cost of administering the estate, then taxes and then most states include hospital and medical bills,” Mignogna said.

However, he added, not all of a person’s assets necessarily are counted as part of an estate for probate purposes.

For instance, with life insurance policies and qualified retirement accounts (e.g., a 401(k) or individual retirement account), those assets go directly to the person named as the beneficiary and are not subject to probate. Additionally, assets placed in certain types of trusts also pass on outside of probate, as does jointly owned property (e.g., a house) as long as it is titled properly.

In fact, a person could pass away with an insolvent estate — that is, one lacking the means to pay off its liabilities — and yet have passed on assets that didn’t go through probate and generally can’t be touched by creditors.

To continue reading, please go to the original article here:

https://www.cnbc.com/2020/05/28/heres-how-unpaid-debts-are-handled-when-a-person-passes-away.html