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Things nobody warns you about being the executor of someone's estate
When someone trusts you to handle their estate, you may feel both completely honored to be chosen — but watch out. While the process of handling an estate from start to finish usually goes smoothly, the job can be somewhat overwhelming if you aren't prepared.
Here are the problems nobody realizes that an executor can face (unless they've been down that road before):
- Heirs with sticky fingers: Part of the executor's job is making sure that the deceased's assets are all collected and secured before they're disbursed. If you're too trusting, however, one or more of the heirs may decide to help themselves to mom's jewelry or dad's antique watches. If valuables go missing, you may be held to account for them.
- Heirs that are disagreeable: You're only doing whatever the deceased wished, so you might believe that the heirs will respond accordingly. Most will — but some may accuse you of playing favorites or something equally unpleasant. Others may demand that you fork over their inheritance right away, and get angry when you say that you can't.
Are credit cards a scam?
When you start having issues with credit card debt, they can start to feel like a scam. Say you can't afford to pay off the entire balance. The fees are large enough that just paying them off is all you can manage the next month. This process repeats itself over and over until you realize that you've been paying for months without actually making any headway.
Certainly, there are credit card scams. People may try to give you fraudulent cards, they may steal your identity, or they may sign up for cards in your name. These scams do exist and you need to know what to watch out for.
On the whole, though, the idea of credit cards is not a scam in and of itself. In the example above, you're just experiencing the strict penalties that go along with failing to pay the minimum balance. That's not a scam, as you were told how it worked at the beginning.
What it is, though, is a financial situation that is designed to make money for the credit card companies. They charge you hefty fees and interest rates because it's profitable. It's not set up to make it easy to get out of debt. If you're just treading water, that's good for the credit card company. They're making money off of all those fees and interest payments, even if you're not actively using the card anymore because you can't afford it.
Is an irrevocable trust the right choice for you?
When you're considering setting up trusts, something you may want to consider is an irrevocable trust. Irrevocable trusts have a few benefits that you may not see with others.
Why? When you create an irrevocable trust, you're taking assets out of your hands. That means that you can:
- Protect your assets against creditors if you die with debt
- Assign assets to specific children, family members or friends
- Save money on your tax bill by limiting the value of your estate
There are many different kinds of irrevocable trusts, which is why it's a good idea to talk to your attorney about creating one if you're interested. Some possible kinds of irrevocable trusts to consider include:
- Irrevocable marital trusts
- Irrevocable life insurance trusts
Claim back your life with a Chapter 7 bankruptcy
When you realized that you weren't going to be able to catch up on your bills, it upset you a lot. You felt like you were a failure and that you would always be struggling with debt.
You should know that most people go through a situation like yours at one time or another. Whether it's because of a medical emergency, a lost job or another problem, financial issues can be a result. There is no shame in needing help, and bankruptcy is one option that you can pursue.
Chapter 7 bankruptcy is a type of bankruptcy that allows you to eliminate the majority of unsecured debts, like credit card debts or medical bills. In exchange, you may need to give up (or liquidate) some of your assets. You won't always have to give up items in your possession, however, depending on the exemptions you can use and what you own.
Asking ‘what if' when writing a trust
One of the most important things you can do while setting up a trust as part of your estate plan is to ask “what if” questions about the future. These questions can help you plan accurately for your children.
For instance, you may be considering an incentive trust on the grounds that you want your children to keep working. You know that you can leave them enough money that they could quit their jobs. An incentive trust can incentivize them to work by stating that they have to be employed to get a yearly payout from the trust, rather than just leaving them the money.
This all sounds good, but what if the country goes into an economic depression? This is not your children's fault, but they could get fired. Since they're unemployed, they won't qualify for the payout. This leaves them with nothing. Wouldn't you rather set the trust up to help them out at a time like this, when they need it most?
Don't neglect estate planning as a new parent
Your children count on you to support them throughout the time they live at home. They usually don't worry about what's going to happen to them if you and their other parent both pass away, but this is something that you need to consider. As their parent, you have the responsibility to set a plan in place for them now just in case the unthinkable happens.
When you're setting up the estate plan, one critical component is the guardianship designation. You must ensure that you're thinking carefully about who is going to raise the children if you aren't able to. This person must be able to keep up with the kids and raise them in a manner in which you'd approve.
If you have more than one child, you can name one guardian who will raise them all. You can also name a different person for each child. You have to do what you feel will be in each child's best interest because the court will consider this if the guardianship has to be put into place.
Do your kids inherit your debts when you die?
If you have a lot of debts, you're far from alone. The average American household now has a debt load of $137,063 — and that's probably not going to change any time soon. For people who are in their senior years, that often leads to a lot of worry about what happens to those debts when they die.
Here are some things to know:
- Your mortgage may have a pay-off clause. Check the loan documents you signed when you took out the mortgage on your home. Many banks and credit unions offer insurance that will pay off a property if the homeowner dies before the loan is repaid. Lacking that, your mortgage will have to be paid off through your estate before the rest of your assets are distributed.
- Credit card debt and other bills may also pursue your estate for payment. However, the credit card companies, doctors and hospitals that probably hold most of your debts can only pursue what's actually in your estate — not anything that bypasses it.
Drop in job postings shows that bankruptcy could be coming
It's been a tough couple of months for the economy, and many people are out of work. It's hard to find new jobs or bring home any sort of income at all. That may mean that a lot of bankruptcy filings are on the way if the economy does not recover quickly.
You can track the risk in a lot of different ways, but let's just look at job postings. On ZipRecruiter, a popular job posting site, the total number of listings has plummeted by a staggering 48% since January. There are few more clear indicators that the job market just isn't there.
When asked about it by Fortune magazine, many legal professionals said that they definitely thought a wave of filings was in the works. They were preparing by hiring more staff, though they admitted that they did not know how soon it would begin happening or exactly how many new cases they would see.
Should you seek bankruptcy for credit card debt?
At this time a few months ago, you were very happy with your finances. You were carrying a few thousand dollars in debt, but you had also gotten a wonderful job that made making payments (and payments of more than you owed) possible.
Then, you went to work one day and saw a notice on the door. Your employer went out of business, and you were all fired. There was no warning.
You had a month of savings, but you weren't able to find a new job that quickly. Even when you did, it didn't pay what your old job did. Now what do you do? You're swimming in debt, and you're missing payments.
Bankruptcy can be a good choice for people in your situation. You didn't plan for things to go badly, and you had a savings in place. Though you had debt, you had been making headway on eliminating it. Needing help now isn't a sign that you weren't careful enough or that you made bad decisions. Losing a job, suffering from a medical emergency and other sudden changes affect people all the time.
Do not wait until you're older to do estate planning
One of the most common things that people say, when asked when they are going to do their estate planning, is that they're just going to wait until they're older. They feel like the time isn't right.
This can happen to all age groups. Maybe it's a newly married couple that wants to wait until they have children. Maybe it's middle-aged parents who decide to wait until after the kids are out of the house. Maybe it's a couple who is nearing retirement age and decides that, after they retire, they'll take stock of what they own and put together an estate plan.
No matter what the specifics look like, the truth is that you should not wait. Some have gone so far as to call it estate planning's number one rule. A lot of people procrastinate and it is perhaps the biggest mistake made when it comes to end-of-life planning.
The reality is that you can't predict when your family will need that estate plan. You may hope that you'll live to be in your 80s, but that's actually higher than the life expectancy in America. You can't count on that for certain. Even young, healthy people lose their lives in car accidents every day. Others pass away from sudden diseases.
From our office in Geneva, Illinois, we serve clients throughout the region, including the communities of St. Charles, Batavia, Aurora, Elgin, Elburn, Sugar Grove, North Aurora, South Elgin, West Chicago, Fox Valley, Winfield, Wayne, Big Rock, Naperville, Wheaton, and Downers Grove, as well as other municipalities in Kane County and DuPage County.
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