There are many things for you to consider in terms of what will happen to your assets after your death. You want your home and car to go to someone you love and your retirement fund to get portioned out properly, but what about your debts? Though you have credit cards and mortgages taken care of, do you have student loan debts too?
When you die, your federally insured student loan debts are forgiven. That means that your loved ones will not be responsible for taking over the debt or any payments associated with that debt. In order to stop payment requests, your estate’s executor will have to send your death certificate to the federal student loan lender. The process, however, is not easy.
When you create your estate plan, consider making a plan to handle all student loan debts. Even if you expect them to be paid off by the time you retire, if an emergency happens you need to ensure that your debts are taken care of. Have your estate planning attorney draw up letters, create plans and have all of the necessary documentation so that when your executor needs to cancel your federal loans, it can be done with ease.
One thing to note, however, is that private student loans will be treated like other debts associated with your estate, which means your executor will not have the luxury of discharging them and your estate will be responsible for paying them.
- Words to the Wise: Five Estate Planning Suggestions - March 1, 2021
- Updating Your Plan: Beneficiary Designations - February 26, 2021
- Four Inheritance Planning Tips for Blended Families - February 17, 2021