It happens so often that a client calls a lawyer looking for advice on Phoenix Living Trust issues and a major one lately has been property debt and how it impacts their estate plan. An example of this kind of Phoenix Living Trust concern would be if one’s spouse passes and all of the property owned was titled into their Phoenix Living Trust and there was an issue was the credit card debt held by the spouse who had passed. Many people don’t know how this effects their inheritance through the Phoenix Living Trust and are unsure about what to do when it comes up. Learn about community property debt in the world of Phoenix Living Trust documents.

What Happens to Credit Card Debt as it Relates to Phoenix Living Trust

Many times, when there is an issue like the scenario mentioned prior, a call to the credit card company could help the remaining beneficiary to get separate credit card payments reduced without the need for legal intervention. In many cases though, people simply cannot afford to pay the debts accumulated by the deceased spouse or trustor and need more. Few credit card companies will eliminate the debt, but don’t count on it, especially if you are a beneficiary named in the Phoenix Living Trust. Beneficiaries of Phoenix Living Trust documents are often met with very aggressive and intimidating debt collectors in circumstances such as these. Collectors use scare tactics to make the widows and widowers feel obligated to pay for their spouse’s debts that aren’t necessarily even their obligation. When there is an existence of a Phoenix Living Trust, those debts are handled differently than property debt associated with the trust.

How to Handle Debt After the Passing of the Trustor

Creditors can file a claim against the estate of the deceased party, usually up to a year after. It’s actually in the benefit of the survivors to not start any probate court proceeding on the estate because that’s the only way a creditor can file a claim. In very rare instances, a creditor can start probate proceedings if the debt is substantial enough to warrant this response. Most of the time, the estate is safe because of a Phoenix Living Trust.

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