4 Reasons To Start Estate Planning Right Now

4 Reasons To Start Estate Planning Right Now

4 Reasons To Start Your Estate Planning Right Now

Many people, while still in their early youth years start estate planning, while others tend to hesitate to give it a thought. Most people don’t like to or want to start estate planning early in their life, because they don’t want to think about death and the what will happen afterwards. But, death is inevitable. Sooner or later you will have to start estate planning.

Estate planning might make you feel light headed, because of all the important and legal concerns attached to it, but it should be planned keeping in mind your own preferences and the concern for your children’s betterment. The following 4 reasons will convince you to get the ball rolling with estate planning.


Save Your Family From Heated Court Battles:

After your death, if there is no written Will left by you to your family, this might create some quarrels within the family. Your siblings or spouse might fight over issues related to the wealth and other financial assets left behind by you. When there is no one particular person who has been assigned the position to distribute your assets after your death, then people with no right to intrude, might interfere in your personal family affairs. It all just leads to trouble.


Secure Your Heir’s Future:

The sole purpose of estate planning is to ensure that the future of your family and children is made secure. Throughout your life you paid your insurance and saved money in a retirement plan. Should it be utilized to pay for your son’s college tuition? Or to help your daughter start her own business. These points can be mentioned in the Will as per your own and your family’s preferences. I know that may seen like a silly scenario, but things like that this actually happens. The devil is in the details. When certain things go unaddressed, there is always trouble.

Prevent Unwanted Heirs:

If you, by any chance make the mistake of not penning down a Will, with no specified heirs, then the state court would deem it necessary to decide who will become your legal heir, on its own. This situation is extremely time consuming and might lead to the selection of heirs who were never meant to be beneficiaries. Potentially keeping your intended heirs’ from inheriting your financial assets.


Appoint Guardians for Younger Children:

If in an unfortunate event, both parents pass away, leaving behind young immature children, then the Will should specify a person who will take the responsibility of Guardianship of those children. You should always appoint someone closest to you, someone who you trust as your children’s guardian, so that after your demise, your children’s future would be in safe hands.

Estate planning also assists in the distribution of your property among family members, or selecting the charity to which some part of your wealth would go. Settling taxes and debts should also be mentioned in the Will, so that the executor of your Will, knows how to resolve and carry out each and every one of your last wishes, keeping in line with your predilections.


It’s important to note that estate planning is not just for the super wealthy. Estate Planning could save your family a lot of headaches down the road. Just the give it a thought. Let us know in the comment sections below what your thought are, or if you have any questions. Check Our Reviews page for more insight into trusted companies. Check our site for reviews of all kind.

What Happens To Your 401k After You Die

What Happens To Your 401k After You Die

Saving for your retirement with a 401K investment plan? Great idea. There is nothing better than saving for your retirement. Ensuring a financially safer life for yourself and your beloved family members is always a great idea. Have you ever thought about what would happen to your 401K funds if you were to die? Life is unpredictable and death is inevitable. It’s better to ponder on the difficult financial crisis your family might have to face after your death, earlier in life than later when you are lying in your deathbed.

A 401K funds plan can be acquired by the deceased person’s beneficiary (a person who is named by you to receive the 401K funds after your death). Your beneficiary could either naturally be your spouse or some other person who you name as a beneficiary.  The procedure to acquire a 401K investment plan after your demise, is followed differently in case of different beneficiaries, and the amount of tax payable on withdrawing this money can depend upon the type of company that conducts and executes your 401K investment funds.

Payment of Taxes on 401K Investment Funds After Your Death:

401K investment funds are accumulated through life savings without paying income tax, in the lifetime of the participant. After your demise, the 401K funds become a part of your taxable estate, which means that after acquiring your 401K funds, your beneficiary will have to pay off the imminent state or in some cases, the Federal estate tax that had accumulated on your 401K plan.


How Do Beneficiaries Receive Money From Funds?

If you named a beneficiary in your lifetime, then after your death they can receive money from your retirement account, without the need to wait for proceedings of the probate period to get completed.  The beneficiary can decide whether they want to receive the money from the 401K funds in installments throughout the course of their life or accept the money in the time of 5 years or less.


Settling Debts With 401K Funds:

After your passing, the court would release the order for the payment of all debts and taxes payable on your wealth. Debts should be immediately settled with the 401K funds, after the death of the participant, and later the beneficiary can collect the remaining share of the funds.


Rolling The Deceased Participant’s Account Into The Retirement Account of The Beneficiary:

A beneficiary, or more specifically, a spouse of the deceased participant can decide to combine or roll in their 401K account with the account of the deceased spouse. This way the beneficiary will continue to postpone the tax payments on either account, and will receive the stated distribution.


Beneficiaries Receiving a Lump Sum Payment From the 401K Funds:

If the beneficiary or spouse of the deceased participant, wish to receive the whole lump sum payment from the 401K funds, then they can proceed to do so. But if they are younger than the age of 59 and ½ years, then the withdrawal penalty of 10% would not be payable by the beneficiary. You can then roll this lump sum amount into the spouse’s account.

401K distribution after your death can be complicated. To learn more about how and in what ways your 401K funds will be managed after your death, it is better to consult an estate tax professional to guide you through the entire distribution process.



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Student Loan Debt: What Happens After You Die

Student Loan Debt: What Happens After You Die

Student Loan Debt: What Happens After You Die

Thіnkіng аbоut уоur еvеntuаl dеаth іѕ nоt so fun, but unfоrtunаtеlу, wе’ll аll mееt thе same fate ѕоmе day. But if уоu hаvе ѕtudеnt loans аnd you раѕѕ аwау, іt’ѕ іmроrtаnt to know іf your dеbt could bе раѕѕеd on tо someone еlѕе. So let’s talk about what happens to your student loan debt once you pass away.


Student Loan Debt: Private Loans

Thіngѕ gеt a bit trісky whеn it соmеѕ tо ѕtudеnt lоаnѕ frоm private lеndеrѕ. Sоmе рrіvаtе student lоаn lеndеrѕ dо offer a death dіѕсhаrgе, but not аll of them. Sоmе lеndеrѕ of private (non-federal) student lоаnѕ оffеr a dеаth dіѕсhаrgе if thе bоrrоwеr dies. These іnсludе Sallie Mае, Nеw Yоrk’ѕ Hіghеr Eduсаtіоn Services Cоrроrаtіоn, Wells Fargo аnd Discover. Other lеndеrѕ mау gо аftеr the remaining bаlаnсе frоm your еѕtаtе. If уоur рrіvаtе ѕtudеnt lоаn hаѕ a co-signer, which many оf thеm do, уоu may bе hеаdеd tоwаrd trоublе. Your со-ѕіgnеr іѕ legally rеѕроnѕіblе for уоur dеbt аftеr уоu раѕѕ аwау, regardless оf the tуреѕ оf loans іn quеѕtіоn. Pluѕ, thе full bаlаnсе wіll likely bе duе іmmеdіаtеlу.

Hеаthеr Jаrvіѕ, a ѕtudеnt loan еxреrt, ѕtаtеd that for, “thе dеаth оf thе bоrrоwеr or thе co-signer can trigger a dеfаult. Thаt means thе еntіrе bаlаnсе bесоmеѕ duе immediately, еvеn іf thе ѕurvіvіng signer hаѕ аlwауѕ mаdе рауmеntѕ оn tіmе.” Sо, іf dealing wіth thе lоѕѕ оf a loved one isn’t hаrd еnоugh, gеttіng a bіll for your tоtаl аmоunt won’t make things any easier.

Aссоrdіng tо an аrtісlе оn ProPublica, Frаnсіѕсо Rеуnоѕо со-ѕіgnеd fоr hіѕ ѕоn’ѕ рrіvаtе ѕtudеnt lоаnѕ. Aftеr thе death of hіѕ ѕоn, hе was hounded by dеbt соllесtоrѕ lооkіng tо оbtаіn the rеmаіnіng balance. Hіѕ son died іn a trаgіс ассіdеnt and Reynoso fоund hіmѕеlf unable tо рау thе bіll, ѕеrvіng аѕ the fаmіlу’ѕ ѕоlе brеаdwіnnеr.

Sо whаt are уоu to dо іf уоu hаvе co-signed ѕtudеnt lоаnѕ? In оrdеr to аvоіd situations like thіѕ, lооk into a со-ѕіgnеr rеlеаѕе. Tурісаllу, lenders wіll rеԛuіrе you tо make оn-tіmе рауmеntѕ for a specified реrіоd of tіmе to illustrate thаt уоu аrе financially сараblе оf hаndlіng payments оn your оwn. In аddіtіоn, parent co-signers who соuld end uр liable for private ѕtudеnt lоаnѕ саn look іntо gеttіng a life insurance роlісу for thеіr сhіld. In the event of dеаth, раrеntѕ would rесеіvе a sum of money to help соvеr соѕtѕ. If уоu gо thіѕ rоutе, bе ѕurе tо рurсhаѕе a life іnѕurаnсе роlісу thаt wіll соvеr thе соѕt of аnу оutѕtаndіng dеbt. Fоr example, іf уоu’d bе оn thе hооk for $50,000, then get a lіfе іnѕurаnсе роlісу fоr аt lеаѕt thаt аmоunt оr mоrе.


Student Loan Debt: Federal Student Loans

If you оnlу hаvе fеdеrаl student lоаnѕ, thеrе’ѕ gооd nеwѕ.Fеdеrаl ѕtudеnt lоаnѕ are dіѕсhаrgеd whеn the bоrrоwеr dies.” That mеаnѕ іf уоu die wіth fеdеrаl ѕtudеnt loan dеbt, уоu wоn’t hаvе to worry аbоut іt being passed on to аnуоnе else.

Pаrеnt PLUS borrowers are also еlіgіblе fоr a dеаth discharge. Fоr Pаrеnt PLUS lоаnѕ, іt’ѕ the раrеnt — not thе ѕtudеnt — whо is legally obligated tо repay the lоаn. “These lоаnѕ саn be dіѕсhаrgеd whеn еіthеr thе раrеnt оr thе student dies. Dіѕсhаrgеd federal ѕtudеnt lоаn оblіgаtіоnѕ won’t pass to your еѕtаtе, аnd уоur heirs wоn’t hаvе tо pay them off.

In оrdеr for уоur lоаnѕ to bе dіѕсhаrgеd, a family mеmbеr оr еѕtаtе rерrеѕеntаtіvе muѕt рrеѕеnt a сеrtіfіеd dеаth сеrtіfісаtе tо thе school (fоr bоrrоwеrѕ wіth Pеrkіnѕ Loans) оr tо the lоаn ѕеrvісеr (for borrowers wіth a Dіrесt Loan or FFEL рrоgrаm lоаn). Hоwеvеr, thеrе іѕ оnе important thіng tо nоtе about Parent PLUS lоаnѕ. If thе lоаn wаѕ discharged duе to the student’s dеаth, раrеntѕ wіll receive a 1099-C form from thе IRS. Thіѕ form ѕhоwѕ the amount оf rеmаіnіng dеbt that wаѕ саnсеllеd and is treated as tаxаblе іnсоmе. Pаrеntѕ іn thіѕ ѕіtuаtіоn may bе hіt wіth a large tаx bill.


Student Loan Debt: If Yоu Arе Married

If уоu dіе, your ѕроuѕе could bе liable fоr your ѕtudеnt lоаnѕ. If you acquired student lоаn dеbt during thе marriage аnd live in оnе оf the nіnе соmmunіtу property states — Arіzоnа, California, Idаhо, Louisiana, Nevada, Nеw Mеxісо, Tеxаѕ, Wаѕhіngtоn, or Wіѕсоnѕіn — уоur spouse mау bе lіаblе fоr your ѕtudеnt lоаnѕ after you dіе. Thіѕ is usually nоt the саѕе іf уоu tооk оut уоur student loans before marriage, however. In thіѕ case, your ѕроuѕе wоuld bе оn the hооk only if thеу were аlѕо a co-signer.


Student Loan Debt: Whаt Shоuld Yоu do?

Thе аnѕwеr tо what happens to student loans whеn уоu die іѕn’t a ѕtrаіghtfоrwаrd answer — іt dереndѕ оn thе tуреѕ of lоаnѕ уоu hаvе, thе state уоu live in, if you have a cosigner, аnd more. Thе bеѕt thіng you can do tо mаkе ѕurе уоu аnd уоur fаmіlу are protected bу undеrѕtаndіng your lеndеr’ѕ роlісу rеgаrdіng dеаth dіѕсhаrgе and rеvіеwіng іn dерth. In аddіtіоn, look іntо со-ѕіgnеr release аnd a lіfе insurance роlісу thаt соuld help wіth аnу оutѕtаndіng dеbt. Preparing now саn ѕаvе your fаmіlу from financial trouble dоwn thе line.

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Debt After Death: What Happens To Your Debt When You Die

Debt After Death: What Happens To Your Debt When You Die

Debt After Death: What Happens to What You Owe Once You’re Gone

I am sure everyday people don’t wake up thinking about how they are going to die that day. While most of us make it through those 24 hours, some people aren’t so lucky. Quite a few of those unlucky fellows leave a fair amount of debt behind. You see, while you’re living your life and making monthly payments to creditors, your kind of forget that you may not be around to live out those full repayment terms. That’s an understandable thing to think. We see tragedy on the news, but believe whole-heartedly that something like that could never happen to us. Well guess what, the victims of the explosions, hit and runs, hungry bears, falling pianos thought the exact same thing. So if you have a fair amount of debt, then listen up. We are going to talk about what happens to your debt when you die.


Debt After Death: Statistics

You would not believe how many people die with outstanding debt. Here’s some statistics for you:

  • 73% of Consumer Die with Outstanding Debt
  • The Average Balance is $61,554 (With Mortgage Debt)
  • With No Home Loans the Balance is $12,825

So, what exactly is making up all this debt? I’m glad you asked. Here’s some more statistics:

  • Credit Cards – 68%
  • Mortgages – 32%
  • Auto Loans – 25%
  • Personal Loans – 12%
  • Student Loans – 6%

If you are wondering if I am just making this up, I am most certainly am not. All this data is based upon 220 million Consumers from Experian’s FileOne Database.


Debt After Death: What Happens When You Die?

So, let’s say you unexpectedly get hit by a bus, and you happen to owe $61,000 in debt. How tragic. Your family mourns for you, but then eventually they all start taking about money, because you you’ve got about $500,000 stashed away. So, what happens to that $500,000? Do your creditors automatically lose out because your dead? Can you just divide that $500,000 to your family immediately? No.

If you die, and have enough assets to cover your debts, then creditors get paid first. Meaning Your beneficiaries get whatever is left. So, in this case, if you owe $61,000 in debt, then your beneficiaries get about $439,000. Now that’s a good scenario for you. Here’s one that isn’t so great.

Let’s say, you are strolling along the road and a piano happens to fall right on you. Wham. You’re gone, dead, in sort of a comedic way. You’ve got $100,000  in credit card debt. Why do you have that much credit card debt? Well, because you probably have a problem. But that’s beside the point. Let’s say you’ve got about $50,000 put away because you want to give your child the best possible education when the time comes. You’ve chose not to deal with the credit card debt, because it would take away from the little nest egg you have. You can’t afford to both pay the debts down and give your kid a chance, so you make a choice.

So, once you are gone what happens to that debt if you do not have enough money to cover it all? Well, if you do not have enough assets to cover the debt, the creditors sort of lose out. That $50,000 isn’t going to cover that $100,000 you owe. At the same time, your kid kind of loses out to. That money is gone. Poof.

Not to worry, I am sure there are plenty of Government benefits they can take advantage of when school rolls around. They’ll just be in debt for the rest of their lives.


Debt After Death: How Does My Death Effect My Family?

Fortunately for you there is a bright side. And no, I am not talking about that bright light you may see once you die. I am talking about some good news for your family.  When you die, your family members do not become the beneficiaries of your debt. Meaning, your debt doesn’t get put under their name.

It’s important to keep in mind that things can get complicated and messy. Here’s an example. If your only asset is the home you and your family lived in, then that will be used to pay your creditors. It doesn’t matter if that’s Credit Card Debt or The Mortgage itself. Meaning your family must take over the mortgage, or they may even need to sell the home to pay off your debts. So just because the debt might not transfer over to them, doesn’t mean they won’t have to deal with it somehow.

If you have Co-signed on anything, then most likely the debt will be falling on the shoulders of the other signer. Properties where spouses share ownership, also handle debts acquired during a marriage. That’s kind of a terrible burden to put on anyone’s shoulders, especially your spouse’s.


Debt After Death: How to Protect Your Family

Is there any way you can make sure your family doesn’t have to deal with your mess? The best advice would be to make sure you aren’t in any debt. You can also try sticking to a budget while you are alive.  You may also want to consider life insurance and meeting with an estate planning attorney to make sure everything’s covered in the event of your death. That’s if you can even afford to do any of this stuff. Just keep in mind, good or bad, everything you do will affect your family in some way.


Death After Debt: Conclusion

Not planning for the worst now can really screw over the ones you love if something terrible were to happen to you. If you don’t have a will in place, the expenses to have these matters determined by the courts is outrageous. The administrative costs get paid before creditors and beneficiaries. Meaning even less for your loved ones. You really must ask yourself a very important question. If I died today, would my family be alright? If yes, then great. If your answer is no, then something needs to change.

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