If you are under the impression that you can hold off paying your debts for now and when you eventually die, your debts will simply be wiped, nothing can be further from the truth. Both your assets and your debts will survive you and your estate will hold the responsibility for covering your debts after you are gone f you do not do that before.
Therefore if you are thinking ahead, it is important to plan to settle all your debts to ensure that you do not leave your family more debts to worry about after you are gone.
Your Debts does not die with you
While your family will not be required to take personal responsibility for your debts after you are gone, these will need to be paid out of your estate providing there s money left in t. You will not be able to leave unpaid tax debts or other liabilities while leaving your children your paid out home. The home will need to be sold and the proceeds applied to the payment of your debts and only the remaining moneys (if any) will be given to your family.
If you hold a joint mortgage with your spouse, upon your death the spouse will need to take on the mortgage fully into their own name. They naturally need to be able to qualify for this mortgage on their own given their health, age and income. Sometimes to avoid needing to sell the family home, a family member needs to go on the mortgage with the remaining spouse to help them qualify for the loan.
Understanding Estate Planning
This is where estate planning comes in. Everyone should consider what will happen to their assets and debts after they are gone. If you are married, one of the considerations needs to be what will happen to any pension entitlements of your partner after you are gone. Will their asset position be such that they will no longer qualify for a full pension? Will they qualify for a pension at all? If there are debts to settle, it may be beneficial to sell up some of the assets and pay these off sooner rather than later.