Last week I came across an interesting article by Lisa Holton on CreditCards.com - Couples should debt plan when estate planning. With credit card and other debt at an all time high, the article points out that the failure to make a plan for paying off debt if you were to die unexpectedly can leave your family emotionally and financially devastated.
There are some tricky situations that can happen, particularly if you have any joint credit card accounts or if you live in a community property state. For example, if you have a joint credit card account with your son and there's a large balance on the account at the time of your death, then your son will be on the hook for paying off the balance in full. Or if you live in certain community property states and even if the credit card account is in your sole name, your surviving spouse may be on the hook for paying off the balance of your separate account.
Don't forgot about credit card and other debt when planning your estate, particularly if you're married. Be sure to have a plan for paying debt off after you die, such as purchasing life insurance to provide quick cash during a traumatic time. Otherwise your spouse may be forced into a fire sale or, worse yet, bankruptcy, to pay off your debt.
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