People in California know that the Great Recession has been hard on many families, as unemployment rates have skyrocketed, and tax increases have resulted in a tremendous decimation of wealth across nearly every generation. People may be surprised to find out that older Americans have received a disproportionately high amount of this burden.
A recent study showed that people over the age of 65 have the highest increase in the number of bankruptcy filings. It may even shock some to find out that this traditionally penny-wise age group has roughly 50% more credit debt than younger generations.
Many older people in California are worried about retirement, health insurance and their estate plan, and for good reason. As people age, their medical expenses can skyrocket, and, those who are caught unprepared, may wind up facing a shock in the form of unforeseen debt. Medical costs are something of an inevitability, and people today on average are not saving enough for a comfortable retirement.
These are just two reasons why it is more important than ever for people to start thinking about their estate plans and asset protection strategies at an earlier age. After all, debt does not always die with the debtor. A recent article discussed how dying with debt can actually transfer over a lot of the liability to would-be heirs and children. Children may co-sign documents, such as nursing home contracts or mortgages, and, as the surviving party, will still be on the hook when a parent dies.
In addition, gifts, asset transfers and other amounts given to heirs can be “clawed back” by certain creditors to satisfy the debts of the deceased, so people really need to know how and when to best utilize and disburse their financial assets. Estate planning is an essential step for anyone who wants to make the most of their assets for the enjoyment and prosperity of their family, as well as themselves in their old age.
Source: Business Insider, “Here’s The Real Cost of Dying in Debt,” Steve Yoder, June 12, 2013.