Can Your Child’s Student Loan Debts Turn Your Estate Planning Upside Down?

As he approaches 60, Mason’s dreams of retirement have been shattered. He’s done the math, and he will have dependent children living under his roof until he is almost 70 years old.

A recent article from CNN Money shares the story of the man described here. He and his wife suffered the death of their 27-year-old daughter. After their death, they became guardians to her three children, who were all under the age of 10 at the time. On top of that, they’ve also been struggling with the repayment of her student loan debts.

When their daughter started nursing school, her parents had been cosigners on loans taken from private lenders. The loans amounted to $100,000; and when the creditors started going after them following their daughter’s death, they also needed to deal with late fees and steep interest rates. These troubles piled on the emotional devastation following their daughter’s death and the financial difficulties of supporting three grandchildren.

They have since managed to work out a more favorable repayment arrangement with some of the private lenders; but money is still a struggle, and they’ve needed to do away with their retirement plans. Their estate planning also requires a complete overhaul.

What to consider before becoming a cosigner

For one thing, you need to look at the loan forgiveness terms any time you become a cosigner. For student loans, for example, private lenders aren’t obligated to negotiate with you; they could demand all the money back. Even if your adult child is still alive, you may still be on the hook for the debts. For instance, if your child files for bankruptcy, creditors may go after you. This is especially true if your child files for Chapter 7 bankruptcy; Chapter 13 bankruptcy may offer you a stay from creditors, but it isn’t guaranteed.

Compared to private loans, a student loan from the government generally offers more favorable terms for forgiveness and repayment (especially in situations involving the death of you or your child). But it’s critical that you read the fine print and figure out how much of an obligation to repay the debts you’d face as a cosigner. For example, when it comes to student loans, who is listed as the legal borrower on the agreement – you or your child?

The same holds true for any loan where you’re a cosigner. Also, don’t forget situations where you’re a guarantor, backing someone up by agreeing to pay off a debt if the other person is unable to.

It’s crucial that you consider your status as a cosigner or guarantor when working on your estate planning. When you contact us, we can give you advice about protecting assets from creditors and also making financial decisions that are most likely to benefit you and your loved ones in the long run.

Guardianship Litigation Can Be Challenging, But Sometimes It Is Necessary

Many people have their struggles with how they are going to help an aging family member or an aging friend or neighbor who can no longer care for himself or herself, in terms of the personal welfare and financial decisions. Many people want to offer their assistance, but they may be unfamiliar on how to get the legal authority to make it happen.

The person who may need the help may have not planned ahead by signing any kind of documents that gives someone else the legal authority. On the other hand, legal documents could have been signed, but it may list someone else as a potential authority. Guardianship gives someone the legal right to make key decisions for that person you love.

If there is an issue with other family members not properly taking care of the loved one, the person is not being properly cared for at a facility, or the alleged incapacitated person doesn’t want to have a guardian, guardianship litigation will occur at the beginning of the guardianship. The adult may not have any interest or willingness to become a Ward of the state, and that person has a legal right to fight the decision. Sometimes, you will find someone who is not really looking out for the person, but they may want to do it for their own sake.

Guardianship and probate matters are not things that should be taken lightly. These matters are constantly progressing, and they can be very complicated. It is critical to have someone on your side who will be extremely focused on the matter. You will need someone who understands everything of the matter, including the seriousness.

It is very important that family members, friends, or care providers to at least try to attempt to work with someone who is incapacitated. The person should be protected from being financially exploited and abuse. If an adult doesn’t think he or she needs guardianship, there may be resistance and refusal. Guardianship may be necessary if you feel that the person you want to help could do physical harm to himself or herself, as well as financial harm.

If you are struggling with finding an answer to your situation, there are people who can help you. Contact us, and you will not have to do this alone. We can give you the help you need.

When your children aren’t receiving equal inheritance: Advice on soothing feelings and reducing the risk of estate litigation

As you work on your estate planning, one of the decisions you may make is to leave unequal portions of your estate to your child beneficiaries. Maybe you have a good reasons for doing so. However, your children may react to your decision with hurt and anger.

A recent article from Daily Finance mentions how adult children could interpret unequal inheritance as a sign that you also love them unequally. Some might choose to pursue estate litigation contesting your will or other estate documents. But even if they don’t, they might be bitterly hurt and also resentful of siblings who inherited more.

The following is some advice for reducing the chances of pain, rancor, and possible litigation:

Give your decisions careful consideration. If you’re thinking about distributing your estate unequally among your kids, make sure you have good reasons for doing so. Don’t act out of spite or impulsiveness (for example, in angry, knee-jerk reaction to a fight you may have had with one of your children).

Explain your decision to your children. Ideally, you’ll discuss your estate planning with your children when you’re still alive and in possession of full mental capacities. Even if it’s a painful subject, try to discuss your reasoning with them. In some situations, your reasons may be more understandable; for example, you might be leaving more money to an adult child who has serious medical problems and, in consequence, more expenses. In other cases, the reasons may be less acceptable to your children; you may have to prepare yourself for some fraught conversations.

Make your explanations as loving as possible. When you discuss your estate planning with your kids, keep the conversation as gentle and loving as possible. Don’t inject unnecessary rancor into it. You can also leave each child a note after your death, not only explaining your decision but also reaffirming your love for them and the fact that your decision isn’t based on favoritism.

Make your estate documents ironclad. To reduce the chances of a dispute after your death, make sure your will and other estate documents are written in an airtight and clear way, reflecting your wishes unambiguously.

When you contact us to discuss your estate planning, we will help you with every part of the process, including giving you advice on how to consider and handle a situation involving unequal inheritance. With the assistance of an experienced estate attorney, you’re more likely to succeed in having your wishes respected without alienating your child beneficiaries.

What Two Aspects of Guardianship Litigation Do You Need to Consider to Make it Legal? (Part 2)

Dealing with Guardianship of the Estate

Being guardian to an entire estate means a lot more complicated legal territory to cover. We’ll be there for you through every step if you need complete financial control of a family member. You’ll still have to attend a hearing, and the person you’re caring for may be asked to attend as well if they’re able to.

Here, the bond you put up is going to be more substantial due to your control of the person’s finances. You also have to go through the legal steps of filing for an allowance that covers all the monthly expenses while you care for your family members. This even goes as far as having to publish a notice to creditors in a local newspaper to prove the person you’re guardian to has no debt.

Contact us here at Ford + Bergner LLP so we can help you through the entire guardianship application process in both of the above scenarios. We want you to have peace of mind about gaining control over a loved one’s life and finances, especially when it’s to rescue them from abuse.