3 Ways You Can Protect Yourself From Inheriting Debt
Author: Deb / Date: August 8, 2023 / Tags: avoid debt
(MoneyHippo.com) – When loved ones pass away, they typically bequeath their possessions to those left behind. So, that’s usually what most people have in mind when they hear the word inheritance. However, people can inherit debt too, which can be detrimental to those receiving it. Fortunately, you can protect yourself from inheriting such obligations. All it takes is a bit of savvy and an open discussion about inheritance with loved ones. Here are three things to watch out for:
- Supplementary Credit Cards: Credit cardholders can sometimes request an add-on card from their bank for a family member to use. The card ties into the original account. Yet, if the primary cardholder passes away, the supplementary holder could be responsible for the whole balance. To avoid this problem, decline this type of credit card from a loved one.
- Joint Debt: A second way to avoid inheriting debt is to avoid co-signing for a loan or any other type of debt. Although it may help someone qualify for a loan, it leaves you responsible for that obligation should they pass.
- Open Communication: Talk with your loved ones about their estate plan while setting up your own. Consider opening a life insurance policy that pays off any outstanding debt you may have and suggest they do the same. Working with an attorney to plan what happens to your estate can encompass your assets and liabilities and include a will instructing those left behind.
With a bit of planning, making smart choices, and keeping the lines of communication open, you and your loved ones can avoid taking on unintended debt in times of grief.
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