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Can you use your final will to forgive your debtors?

On Behalf of | May 14, 2022 | Estate Planning

Are you the kind of person that enjoys helping those close to you? If yes, then you may have accumulated a small fortune in loans and debts owed to you or your estate.

In the interest of helping and giving, you might want to forgive those who owe you. On the other hand, you also want to ensure your loved ones learn the importance of paying off their loans.

Debt forgiveness in your will may be the answer

If you wait until your death to forgive those who owe you money, it probably will not obscure the lessons you want to teach. The way you word yourself when relieving debtors can make a difference in how they perceive your gift of forgiveness.

Before you draft a new will or make changes addressing your debtors, take some time to go over the current will and estate laws. This step will ensure you make no mistakes or include unlawful provisions. It is also wise to have an estate planning professional review your new will.

Choose the language that expresses your appreciation for those that made meaningful efforts to pay you back the money you loaned. That way, you can still impart the wisdom of addressing financial obligations. You can close this portion of your will by explaining that forgiving these debts is your final gift to those you cherish.

Keep in mind that, if your loans involve another party, they may be ineligible for forgiveness in your will. For example, if you and your spouse loaned your grandson $5,000 jointly, you cannot forgive that debt through estate planning unless your spouse agrees, preferably in writing.

To discover other unexpected ways estate planning can help you fulfill your dreams, learn more about the laws that govern California wills and trusts.