Estate Planning - why should I plan? I'm not here ...

I came across this article that discusses the family's responsibility to cover debts of a person who passes away - Will your heirs get slammed with your outstanding debt when you die? (By Sarah O'Brien, special to CNBC.com). With the average unsecured debt, the family generally has no responsibility to pay the debt. The executor of the person's estate has an obligation to pay the bills from the estate before any of the estate can pass to the heirs. The article also explains the challenges with secured loans and mortgages; they need to be paid or the property will go to the creditor. But with a little planning, a financially secure person can take care of most of this before they pass.

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One thing the article doesn't mention is financial support from the state; Medicaid/medical assistance/long term care. The state is mandated by the federal government to attempt to recover medical assistance payments whenever possible. This issue revolves around ownership interests and timing. This is more complex and must be done years before a person's death. Fortunately, the state is limited to the person's estate but it can wipe out the entire estate leaving nothing for the heirs. For more info in Pennsylvania, you can check out the FAQs on the state's website: Medical Assistance, ESTATE RECOVERY PROGRAM, Questions and Answers

Finally, we have the "Gottcha" issue. There are times in some state where a child could be stuck with a parent's debt. About half the states in the US have "have so-called 'filial responsibility' laws that require adult children to support their parents if they become indigent." Pennsylvania is one of those states. This article explains, in broad strokes, the law - Children may have to foot bill for indigent parents' care. (By Erin E. Arvedlund, Staff Writer at Philly.com) The article further explains Pennsylvania has gone a little further than other states. "What is unique about Pennsylvania is that the law has been interpreted as permitting third parties, such as nursing homes, to sue the children directly, Pearson explains." This is left out of the article I found first.

Clearly, people should plan for the end of their lives as best they can. It is best if it is done with their children and other family members. Even if you cannot avoid these problems, you can prepare the people you leave behind so the know what they can expect.

If you want assistance, legal representation, or just want to know more about Mark M. Medvesky or Wells, Hoffman, Holloway & Medvesky LLP, check out our website at www.whhmlaw.com.

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