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Estate planning can help young people

Young people in Virginia may not dedicate a lot of time or mental energy to thinking about estate planning. For many millennials, especially those who are single and do not have children, making out a will seems unimportant or a matter to be considered for the future. According to one survey, 78 percent of younger adults do not have a will or other estate documents in place. While many note that death is an unpleasant topic, for many people, the issue is simply off their radar.

Creating a will can be important, especially if the unexpected were to occur. This document spells out exactly how a person wants his or her assets to be distributed. If someone passes away without a will, state laws on intestacy will apply. For people who are single without children, their parents will generally inherit any assets. Even those who are satisfied with their parents receiving everything may want to save them time and potentially costly fees by making their wishes clear.

Rise in credit card delinquencies worries economists

Figures from the Federal Reserve suggest that a worrying number of consumers in Virginia and around the country are finding it difficult to make their credit card payments on time despite a robust economy and low unemployment. The credit card delinquency rate in the United States now stands at an alarming 2.47 percent. That figure was 2.42 percent at the beginning of 2017 and 2.12 percent in early 2015. This means that about $23 billion in this type of revolving debt is currently 30 or more days past due.

Just as concerning for economists is the reasons why many Americans are not paying their credit card bills on time. An online survey of 2,019 consumers conducted by the financial information and advice website NerdWallet revealed that almost two-thirds of those with delinquent revolving debt fell behind because they simply did not have enough money to make their minimum monthly payments. A third said that they needed the money to pay for essentials and 32 percent put the blame on an emergency or unexpected expense.

Likelihood of bankruptcy after retirement increases sharply

People are filing bankruptcy in their golden years more than before according to a study by a professor group. The professors used data gathered by the Consumer Bankruptcy Project and determined that the number of bankruptcy filings by people aged 65 to 74 grew by more than 200 percent between 1991 and 2016. In Virginia and across the U.S., the rate of bankruptcy filings by people 75 or older has more than tripled over that same period.

According to the study, one in seven people who files bankruptcy is 65 years of age or older, an increase of five times between 1991 and 2016. The mean of the ages of filers in 2007 was 44.4 years old; it increased to 48.5 over less than 10 years. The study says that's a statistically significant difference.

Important estate planning steps for new parents

Becoming a parent can change virtually every element of your life, from how you spend your money and time to how you make plans for the future. If you already have an estate plan in place, you may need to make some fundamental changes to it once you have a son or daughter of your own. Conversely, if you do not yet have an estate plan in place when you become a parent, it is a good time to get down to business creating one.

Creating your estate plan gives you an opportunity to leave a lasting legacy behind for your child, and it can also give you peace of mind when it comes to who will provide care for your child, should you no longer be able to do so yourself. While every estate plan is different, there are some important steps you may want to take with regard to it once you become a first-time parent. For example, once you become a parent, consider the following:

Estate planning involves more than just creating documents

Developing a viable estate plan involves more than just making a will for distributing assets. Virginia residents may be interested to know that the people they pick to carry out their plans can be just as important as the documents themselves. Picking the wrong representatives for estate planning tasks can have devastating effects.

There are several types of representatives a person can choose. For example, an executor manages the estate after the creator's death and is responsible for carrying out their last wishes as stated in the will. If a Virginia resident sets up a trust, they can set some guidelines for how they want it handled. A trustee makes the financial decisions on how the trust should be handled.

The automatic stay in personal bankruptcy

When Virginia residents file Chapter 7 or Chapter 13 personal bankruptcy petitions, an injunction known as an automatic stay is issued. This injunction is designed to give individuals the time they need to put their financial affairs in order, and it places strict limits on creditors. While the automatic stay is in force, efforts to repossess assets or garnish paychecks must be abandoned, and attempts to collect unpaid debts must cease. Creditors who willfully ignore these rules may be ordered to pay punitive as well as compensatory damages.

While the automatic stay goes into effect immediately, it can sometimes be two or more weeks before creditors learn about it. This is because debtors are under no obligation to inform their creditors about the stay, and bankruptcy courts make these notifications by mail. However, it may be wise for debtors or their attorneys to notify creditors about a bankruptcy filing and automatic stay when a lawsuit, repossession or foreclosure is pending, and time is of the essence.

Explaining a will could prevent disputes

A complete estate plan may require more than just a will, a trust and powers of attorney. When a person with substantial assets dies, family members sometimes dispute the wording in the will and precipitate lengthy legal battles. Financing such disputes in Virginia could deplete the funds in the estate. There are some things a person could do to reduce the likelihood of family strife following their passing.

In many cases, several people are involved in settling an estate. There may be an executor, a trustee and a guardian. It's important for anyone involved in estate planning to consult with the people they select to fill those roles so that they know what's expected of them. Some people might not want to take on the tasks. Finding out in advance could help ensure that the role doesn't go to someone chosen by the court.

Does bankruptcy discharge all of my debts?

Many people have the misconception that bankruptcy will discharge all of their debts. First, there are two types of bankruptcy you could file, Chapter 7 or Chapter 13. In Chapter 7, the court could theoretically order all of your debts discharged. In Chapter 13, you reorganize them into a new payment plan that takes three to five years. What remains after that could be dischargeable.

All that said, whether debts are dischargeable or not largely comes down to what type of debts they are.

Family infighting can limit an estate plan's effectiveness

Estate planning tools can help minimize a family's tax obligation in the future. However, Virginia residents and others may also want to consider how family dynamics could influence the effectiveness of an estate plan. For instance, siblings who don't like each other may not make their feelings known until their parents pass away. In one case, a $1 million inheritance became a $400,000 inheritance because of family infighting.

In addition to fights between brothers and sisters, children may believe that they will inherit from their parents even if they don't have a strong relationship with them. Parents could also cause jealousy among children by picking one to be a trustee. The other children may feel as if a parent is playing favorites by doing so. It may also be possible that the chosen adult child is not good at managing money or has an ego problem.

Understanding how bankruptcy can help with debt relief

Virginia residents who are struggling to keep up with their debt payments could benefit from filing for bankruptcy. Mortgages, auto loans and credit card bills are among the types of debts that could be discharged. It is also possible to have rent, past due utility bills and medical bills taken care of in a bankruptcy case. However, there are many types of debts that either can't or are rarely reduced or eliminated in bankruptcy.

For instance, student loan debts usually can't be discharged unless they cause an extreme hardship. Typically, a student loan debtor would move to an income-based repayment plan to lower his or her monthly payments. If a person owes money to the government, balances owed are unlikely to be done away with. This includes most income and payroll tax debt as well as almost any fines incurred for a violation of state or federal law.

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