Private client partner Georgia Demeros was recently quoted in a featured article on CreditCards.com that was picked up by Fox Business news. The article, “Five steps to prevent your debt from haunting your heirs,” outlines steps people can take to make it easier for their beneficiaries to sort through debts and assets.
The article states that more older Americans are carrying credit card debt, in addition to underwater mortgages and other financial liabilities. “It's not just that people have more debt than they did before, it's also that the value of their assets to pay off the debt has declined significantly," Demeros said in the article. "The house they bought 10 years ago may be upside down, and their investments aren't worth as much."
The article details estate planning strategies that can help maximize the wealth passed on to heirs. For one of the tips, Demeros urged people not to name their estate as a beneficiary of any life insurance policies, retirement accounts and payable-on-death bank and brokerage accounts.
"The worst thing you can do is name your estate as a beneficiary, but unfortunately I see people doing it all the time," Demeros said. "Anything you can keep out of probate is going to be harder for unsecured creditors to grab. But if you name your estate the beneficiary, that asset becomes part of the probate estate."
Demeros also noted that estate planners can often negotiate unsecured debt such as credit card debt. "Sometimes I get away with paying pennies on the dollar," Demeros said. "We usually get into a negotiation situation because they don't want to incur the expenses of a legal hearing process."