Doctors and dentists dedicate their lives to caring for others. It makes sense that they want to consider how to care for their loved ones in the event that they unexpectedly pass. Do you know what happens to your debt when you die? Estate planning will be crucial to ensure that your financial affairs are effectively managed.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
By working with a financial advisor, you can come up with a plan that lets you pass along assets to your loved ones and take care of any unpaid debts. To learn why estate planning is essential for doctors and dentists, read on.
How the probate process helps to manage your estate
When someone dies, their estate goes through a legal process known as probate. The probate process involves the identification and distribution of assets, including bank accounts, real estate, and investments, according to the deceased’s wishes outlined in their Will. Your estate is essentially your net worth; it encompasses everything you own in your name, including but not limited to: your home, vehicles, and other possessions.
Probate prioritises settling debts
It’s important to understand that the main focus of probate is to settle any debts of the deceased. So, before any assets can be distributed to any beneficiaries, all outstanding debt must be settled.
This means that mortgage lenders, credit card companies, and other loan providers all have the right to access funds from the estate before any heirs. They are allowed to claim their repayment from the estate and then anything left over can be passed according to their Will.
When devising your estate plan, if you wish to leave enough to settle your debts and leave specific assets for your family and loved ones, then be sure to work with a financial advisor. They can help you plan to satisfy outstanding debts while still providing for your family’s future.
Protecting your legacy with life insurance
It’s essential that you understand that your beneficiaries won’t receive what they might expect, or in fact nothing at all, if your estate is spent covering your outstanding debt. But this doesn’t have to be the case. You can create a comprehensive estate plan to help prevent this scenario from occurring.
One effective strategy for safeguarding your family’s financial future is investing in a life insurance policy. Life insurance can provide a financial safety net, ensuring that debts are paid off so assets are preserved for your beneficiaries. By naming beneficiaries directly in your life insurance policy, you can circumvent the probate process, expediting the distribution of funds to your loved ones.
Take control of your financial future — contact an advisor today
Estate planning is a proactive approach to managing your assets and liabilities, ensuring that your loved ones are protected from financial burdens, including your debt, after you pass. To ensure that your estate plan is up to date and aligned with your current financial goals, it’s crucial to seek professional guidance.
Dental & Medical Financial Services specialises in assisting doctors and dentists with comprehensive financial planning, including estate planning and wealth protection.
For expert guidance on financial planning, contact Dental & Medical Financial Services today.