When you die, your family will have to settle all of your accounts and pay off your debts before they get to enjoy the assets you bequeath to them. The executor for your estate has a legal obligation to handle your debt before they distribute property to anyone else.
If you don’t have significant debt or you have quite a bit of property, you may not worry about the loss of a few thousand dollars to repay your credit card balances. What you may not have considered is the possibility for you to accrue tens or even hundreds of thousands of dollars worth of medical debt in your last years of life.
Asset protection planning when you plan your estate can help ensure you have a legacy to leave for the people you love.
The property you own is vulnerable to claims
Creditors have a right to repayment from your estate if you don’t pay them off before you die. However, they must bring their final claim in a timely manner or potentially forfeit their right to make claims against the estate or its executor.
Under New Jersey state law, creditors have nine months from the date of someone’s death to bring a claim against their estate. In other words, any assets that you don’t protect in your estate plan through careful planning will have to sit in limbo for three-quarters of a year before your executor can start to distribute them.
During asset protection planning, you change the ownership of your property or give it to others so that it isn’t vulnerable when you die. The nature of your assets and the circumstances of your family will directly correlate to which solutions work best for protecting your most valuable assets.