Estate planning is tricky under the best of circumstances, and even under normal circumstances it can be downright difficult to do correctly. One thing that often slips through our fingers and we fail to spend an adequate amount of attention on is the effect of debt on estate planning.

Most people think, “I’ll be dead, why would I care about the debt that remains!” Well that’s a valid point I guess, but if the people that come after you will have to deal with this then so should you have to deal with it too, in fact what’s the point of planning for anything in that case!

Consider this hypothetical situation; imagine that you have loaned your son $50,000 to start a business. Now imagine that you die. Not a lot of fun – sure – but roll with it here! What happens to that $50,000? (more…)

You may not be aware that the IRS has many payment plans that you can access when you find out that you owe back taxes. A tax professional can help you learn about these payment plans and then assist you in negotiating the solution that’s best for your particular financial situation.

When it comes to payment plans, you’ll first have to decide if you need one. Don’t rule out paying in full. If there’s some way that you could gather the money from accounts that you have in order to pay in full, you should consider it. That way the bill will be paid and the burden lifted off your shoulders. You won’t be dragging out the repayment process and accruing more interest. This might be the way to go even if you fear severely depleting your funds. It’s also possible to borrow the money from family, friends, and other sources in order to pay in full. If that’s an option, consider it seriously.

If you can’t pay in full, you’ll have to think about a payment installment plan. You can work this out with the IRS. They may not seem sympathetic at first, but once it’s known that you’re sincere and intend to pay back the money, you’ll receive fair treatment. Maybe you’ll even be forgiven part or all of the penalties that have been added to the amount if the IRS is happy with the terms you are accepting. You can also pay a good share of the full amount at once and then make installments for the balance.

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A lien is a security interest held by a lender or service provider on an individual’s property, effectively turning the property into collateral pending payment of the outstanding amount owed. A lien may be consensually applied to property, as is often the case with mortgages (especially second mortgages) and “mechanic’s liens” related to financing property improvements.

A lien may also be non-consensually imposed, frequently by tax authorities to secure the payment of taxes and penalties owed or by the courts to secure the payment of amounts handed down in a judgment. Although there are many types of liens, all of which have different effects, most liens have three primary effects.

The first, and most important, effect is to create the possibility of the creditor or service provider taking control of the property if certain conditions are met. Unlike most Common Law jurisdictions, in the United States a lien generally does not result in the creditor taking actual possession of the property, but it can under certain circumstances. These circumstances vary by the type of lien in question, but the ultimate point is to give the person owed money a secure interest in the property. Some, though not all, liens are also exempt from being discharged even through bankruptcy proceedings.

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