It is a common misconception amongst many people that their family will be left to pay their debts when they die. In Australia though, that is not the case.
When you die, any debts that you are solely responsible for will be paid out of your estate and/or any insurance policies held by you.
If there is not enough cash in your estate to repay all of your debts and you have no or insufficient insurance, any available assets in your name such as cars, shares, property and expensive personal effects can be sold to generate cash.
If you do not have sufficient cash, insurance or assets to repay all your debts, your estate will be administered in bankruptcy. In that case, it is unlikely (subject to some exceptions) that the beneficiaries of your estate will receive any inheritance from you. That is whether you have a Will or not.
Your loved one’s lives may also be disrupted in other ways.
For example, any home that you own may need to be sold to repay your estate debts. That means your spouse and/or children would be required to move out and your family may not be able to support themselves financially if they do not receive any inheritance from you.
For more information about estate terms, you can read our article here.
This is why we work collaboratively with our client’s accountant and/or financial adviser to consider how their debts will be paid and how they can see their family is provided for when they are no longer here.
The information contained on this website is for your general information only. You should contact us on 02 6362 5433 for advice tailored to your personal situation.