How broke millennials can benefit from an estate plan
Contrary to popular belief, estate planning isn’t just for the elderly, sick or special needs individuals.
Death and incapacity can happen without warning and without planning those left behind can be in for a disastrous ride.
But don’t let your student loan debt fool you into thinking that you don’t need a plan in place.
Here are some reasons why every millennial with college debt should consider executing an estate plan and what can happen if they don’t.
Student loan debt isn’t always forgiven upon death or incapacity
If you’ve taken out a federal or Parent Plus loan, your debt will be forgiven once you die.
In contrast, if you’ve taken out a private student loan forgiveness policies after death may not be an option. Sallie Mae and Wells Fargo are two private lenders who forgive a borrower’s debt upon death or disability but there may more.
Reviewing your own lender’s policies may be a good idea.
A financial power of attorney is one estate planning document that can plan for your finances. The document assigns a person (“the principal”) to manage your financial obligations such as student loan and other debts upon your death or incapacity.
Your lender may go after your co-signer to collect payments
Private lenders may go after your estate (any money or property that you own) or the co-signers on the loans.
Co-signers can be left to pay the entire outstanding balance of the loan up front to keep going in default. Some co-signers have resorted to executing a cosigner release to make themselves no longer legally responsible for the loan. Other co-signers have taken out a life insurance policy on the debtor so the debt can be repaid if something happens.
Your passing can be especially challenging when you leave behind assets or debt. Planning can allow your loved ones time to grieve instead of going to court to administer your estate. As famous author Alan Lakein once said, “Failing to plan is planning to fail.”