Is Insurance Your Ticket Out of Creditor Claims During Probate?
Once you get past the estate planning conversations about sunset walks on the beach and spoiling your grandchildren at the holidays, the subject often turns to expenses that a deceased person’s estate can incur, the things that will diminish the value of your property between your death and when your heirs receive their inheritance. The wealthier you are, the more elaborate your plans can be to stop creditors and the IRS from claiming money from your estate. You can establish one or more trusts or transfer assets to your heirs while you are alive. Of course, some strategies for keeping assets out of probate are simpler and less expensive, such as designating a transfer on death (TOD) beneficiary for a bank account. Likewise, certain types of insurance policies have affordable premiums relative to the amount that they will pay on claims. Even if you are not wealthy enough to establish a whole new legal entity just so it can possess your property in your stead, you might be able to afford the premiums on insurance policies which, if called upon, can satisfy your debt obligations or help you avoid taking on debts. For advice on your efforts to insure your way out of a probate case plagued by creditor claims, contact a Washington, D.C. estate planning lawyer.
Seniors Are the Ideal Audience for Credit Insurance, but Most People Don’t Know About It
Taking out a loan when you are already retired, or one that has a long enough term that you will likely retire before it matures, is stressful. If you still owe money on the loan when you die, the creditor can seek repayment from your estate. The personal representative might have to sell assets that belong to your estate to settle the debt, or else surrender the asset that secures the loan, when your heirs otherwise would have inherited it.
If you are worried about a loan encumbering your estate during probate, you can buy credit insurance on that loan. Credit insurance will pay the outstanding balance if the borrower dies before repaying the loan in full. Some policies will even pay the outstanding balance if the borrower’s inability to repay the loan is the result of illness or involuntary loss of employment. They might even have provisions about protecting the assets that secure loans.
A credit insurance policy could be just what you need if there is one loan that threatens to upset the balance of your estate. There is a reason that credit insurance has a less than pristine reputation, though. Lenders often sell it to the people who least need it, and regardless of how much it might benefit you, you might not know you have it, so you can’t file a claim when you need the insurance to pay. Sometimes, lenders bundle credit insurance into the other fees you pay with each installment and only mention it in the fine print of the loan agreement. At its worst, credit insurance is just another junk fee.
Contact Tobin O’Connor Concino P.C. About Protecting Your Estate From Creditor Claims
A Washington, D.C. estate planning attorney can help you make wise decisions about borrowing during your retirement. Contact Tobin O’Connor Concino P.C. in Washington, D.C. or call 202-362-5900.
Source:
insurance.wa.gov/insurance-resources/credit-insurance/credit-insurance#:~:text=Credit%20insurance%2C%20or%20debt%20cancellation,making%20payments%20on%20your%20behalf.
