It’s a misconception that debts are written off after an individual dies. Many obligations, such as credit card balances, mortgages and car loans, remain tied to an estate and must be settled before any assets can be distributed. Those due to inherit can be caught by surprise when they discover outstanding bills and creditors awaiting payment.
If a customer dies leaving a significant credit card balance, for example, the executor will notify the credit card company and pay the debt from the estate’s assets. Only then can any remaining inheritance be distributed. This process can be slow, and frustrating for all concerned. But it’s also an issue that can be made much easier with up-to-date estate planning.
Advisors will be familiar with the challenge of an individual dying intestate. It can be just as much of a challenge, however, when a person dies who has failed to ensure their will is current, or who hasn’t told anyone where their will is! A stressful time becomes even more stressful when your clients are taking calls from creditors and grappling with the probate process, while not being able to locate the key documents they need to answer the questions they are being asked.
This is where solicitors and intermediaries have a critical role to play in advising more of their customers of the advantages of effective estate planning and exploring new digital tools that can support a smoother and less stressful inheritance process.
Comprehensive estate planning involves establishing powers of attorney (PoA), confirming healthcare preferences and most importantly, having clear line of sight of an individual’s finances and where the associated paperwork can be located. Involving close family members in the planning process is also encouraged; while it can be understandably awkward, it’s considerably less awkward – and less expensive – to resolve a misunderstanding in advance, rather than discover what has been misunderstood after their death!
These days, the growing array of digital tools is becoming incredibly helpful as they help centralise financial information. Critical documents can be stored securely online. With proper permissions, designated family members and/or trusted executors can easily access important details such as outstanding balances, loan terms, and payment schedules after an individual has died, or as part of their PoA responsibilities.
Organising this information digitally has several advantages. First, it speeds up the estate-settlement process by giving heirs a clear, consolidated view of what’s owed. Second, it reduces confusion particularly when someone has multiple credit cards or smaller, recurring debts like membership fees for clubs and societies. And third, it facilitates better communication between family members and professionals or creditors; an executor can quickly coordinate with solicitors, financial advisors and creditors to settle obligations in a timely manner.
Phil Hickson is SVP, Global Partnerships at The Estate Registry
This article was submitted to be published by The Estate Registry as part of their advertising agreement with Today’s Wills and Probate. The views expressed in this article are those of the submitter and not those of Today’s Wills and Probate.
