Liability Basics

In legal terms, a liability is anything owed to someone else. It is important to consider liabilities when drafting a will because they are a key factor used to determine the total value of your estate. Liabilities offset assets, which are all of the things you own, including land, houses, stocks, money in a bank account, jewelry, and more. In simple terms, the value of your estate is calculated by adding up the value of all of your assets and subtracting all of your liabilities.

Liabilities that you owe may include credit card debt, money owed on a mortgage, and other outstanding loans, such as student loans on which you co-signed. When you pass away, these liabilities don't simply disappear; they still must be resolved. Typically, the executor who you name in your will to handle your estate will be responsible for resolving any outstanding liabilities once you pass away. It is therefore important to appoint someone as your executor who you believe will be meticulous with your will to ensure that your assets and liabilities are properly handled.

Ignoring large, unresolved liabilities and passing them on to your executor and loved ones can put considerable strain on their lives and may cause conflict between beneficiaries and other family members. If you don't take care of your liabilities, much of the estate that you planned to pass on to loved ones may instead be used to pay your liabilities, leaving your beneficiaries with next to nothing. Especially if you have specific items or funds that you wish to pass on to certain people in particular, you should make sure to take care of liabilities that may interfere with these wishes.

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To learn more about liabilities and planning your estate, please contact the experienced Austin estate planning lawyers of Slater, Kennon & Pugh LLP today at 512-338-1100.