It can be fun, if a little sad, to think about leaving your most treasured possessions to your family members when you die. You may know that your grandchild will love an item they long coveted at your home or that your daughter will move into your home happily.
Many testators planning their estates spend a lot of time and energy making decisions about how to divide their belongings in a way that reflects their values and their closest relationships. Unfortunately, if you die with a lot of debt, those efforts could go to waste.
Before your loved ones can inherit your property, the executor of your estate will have to pay your that’s first. Which debts require repayment from estate assets?
Minnesota law lets any creditor make a claim
Any valid debt that you owe when you die, whether it is a medical bill to a nursing home or a credit card balance, can make a claim against your estate. Your executor will need to notify your creditors individually and publish notice as well. Creditors can then make a claim against your estate.
If there aren’t enough assets in your estate to pay all of your creditors, the probate court will prioritize certain debts, like probate costs and tax bills, over others, like credit card balances. Planning ahead to minimize your debts or protect your assets can prevent creditor claims from consuming what you want to leave behind for your loved ones.
Thinking about your current and possible future finances can help you create an effective estate plan that allows you to leave a meaningful legacy.