Set up a Trust FAQs
A Trust is a legal agreement between a minimum of three people -- a trustmaker, trustee, and a beneficiary. The trustmaker (likely you) is the one that puts the assets into the trust. The trustee holds and manages the assets. The beneficiaries are the recipients of the assets. Trusts are commonly used because they can be used, unlike a Will, to distribute assets without having to go through probate. A Living Trust can be written to be distributed upon your death, if you become disabled, or while you are still alive.
If you have a few assets, it may not be necessary. If you have a complicated estate and perhaps estranged family members, you may avoid a lot of problems and family drama by hiring a professional executor. A professional executor such as a lawyer, accountant, or trust company only charges a small percentage of your estate to manage paying your debt and distributing assets.
Your estate, the money and assets you leave behind, will be used to pay your debt. But your family is not legally obligated to pay your debt. If you and your spouse carried mutual debt, your spouse will still be responsible for the shared debt. Most financial advisors recommend that you purchase enough life insurance to cover your mutual debt, so your spouse is not burdened with the entire debt.
When you die, in most cases, your student loans will be discharged. Your survivor will just need to supply the loan servicer a valid copy of your death certificate.
Other student loan debt situations:
If your parents hold student loan debt for you and you have graduated and are making payments, you may try to see if you can change the loan to your name only so your parents will not be liable if you pass.
If you die without a Will, state laws will dictate what happens to your debt and assets. Dying without a Will is called dying "intestate." Most often assets are distributed to family members. If you died while in a relationship, but not married, your significant other will not have any rights to your assets. Most lawyers recommended that everyone should have a Last Will and Testament, even if assets are minimal. A Will can help minimize family disputes after your death.
While you may believe that family or friends will take in your pets, that doesn't always happen and they may end up in the shelter. It is best if you leave behind instructions as to how your pets should be cared for. You can do this by adding a Pet Addendum to your Will. Some also choose to create a Pet Trust to help cover their pet's expenses.
You should also make a plan for what you want to occur if something happens to you while you are away from home or if you expire in the home. You can keep a note in your wallet instructing first responders to call your designated person to let them know they need to check on and/or take possession of the animals. You should also have a plan in place in case you expire at home, for example, a family member or friend can call for a welfare check if they have not heard from you for a few days.