Senior Debt is On The Rise

When it comes to estate planning, many of us think planning for the passing of our assets – real estate investments and personal property. But the reality is not everybody who sets up an estate plan has assets to pass, instead, there is a bigger issue of their debt. A recent study showed that the average 65-year-old has 40% more mortgage debt and 29% more auto debt than the same 65-year-old had over 13 years ago. I anticipate that most adult children don’t even consider the fact that their senior parents are dealing with so much debt. Many administrators go into the “process” with the idea of dividing up assets when, in fact, the administrator of the estate is faced with multiple mortgages on the property, or in some cases, a reverse mortgage on their home. Not only may there be very little equity but on top of that there may be other unsecured debt. More and more seniors are using their credit card to live on and as result there may be more debt than assets. If you have been named as administrator of your parents estate, don’t wait until their death to sit down with them and establish what assets they have, but also what debt they have. Create a plan on how you will deal with that debt at the time of their death. Since you are not personally responsible for their debt, you may need to be prepared to just walk away and let the creditors take over.