Student Loans and Estate Planning

Student Loans and Estate PlanningA 17-year-old can’t legally be trusted to make a life-long decision like getting a tattoo, but they can take out tens of thousands of dollars in debt to go to school. Young adults are faced with a huge decision when they near the end of their high school career, and not even their parents are fully aware of the implications of this amount of debt. Going to college is an amazing opportunity that shouldn’t be diminished by the fear that family members will be saddled with the loan payments long after death. Understanding how student loan debt functions may help you and your family develop a comprehensive estate plan that works for everyone. 

Student Loan Limbo

The conversation around student loan debt forgiveness seems to be dragging on forever. While average Americans wait for a consensus, measures still need to be made for estate planning. Although estate planning is important for adults at every stage in life to create an estate plan, many people still have some trepidation due to the amount of debt they have and the perception that their assets are not valuable. In order to understand why creating an estate plan is important in spite of this perception, it’s important to understand how student loan debt impacts borrowers.

The big question for many people is: will my family get stuck with my student loan debt? Unfortunately, there is no easy answer. It will largely depend on the specific terms of the loans. Government subsidized loans can sometimes be discharged after the borrower has passed, but private loans often have terms that will not allow the borrower’s debt to be discharged. Looking over the fine print of the loans you currently have will have the answers you seek, and can help inform the estate planning strategy you establish with your attorney.

Knowledge is Power

Equipped with a better understanding of your loan terms, you will have an opportunity to develop an estate plan that allows for the smooth transfer of assets and fulfillment of any financial obligations. Effective estate planning will incorporate the potential trustees or executors so that they’re fully informed of their obligations. It may be necessary to outline potential repayment options or a plan of action during the probate process. Even without student loan debt, every estate plan should take all financial obligations into consideration, so it will be very important to maintain extensive records of all debt from credit cards to home loans.

Whether or not you can protect your beneficiaries’ inheritance or your assets from probate or student loan debt repayment will depend on a lot of factors. Since regulation around student loan debt is constantly evolving, it will be important to keep your estate plan up to date to reflect any changes. In the meantime, you and your estate planning attorney may potentially be able to utilize life insurance policies or include specific provisions within a will or trust to protect what matters to you most. 

Conclusion

The most important thing to remember is that no matter what your student loans look like, you still deserve a happy life with a secure financial future. You should be able to share all the hard work you’ve put into your education and career with the people you care about both in life and after death. As with any type of debt, the estate planning process will address the steps involved in handling things like notifying lenders, exploring repayment options, or even loan forgiveness.

An experienced estate planning attorney can help clarify the responsibilities of the borrowers and their executors. As complex as it may seem, you don’t have to go through it alone. The legal team at Ledwidge & Associates is here to assist. For a consultation call (718) 276-6656 today.

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Student Loans and Estate Planning

Ledwidge & Associates

Ledwidge & Associates, P.C. in New York City has years of experience helping clients create estate plans that fit their needs. We have the experience and resources to handle your critical legal matters with the utmost care and attention to detail.