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Could my end-of-life expenses wipe out my estate?

Your estate plan is a way for your legacy to live on and to support your loved ones, even after you pass away. After years of planning, you want your friends and family to have the assets you worked hard to leave for them.

Unfortunately, medical care is often an unexpected expense, especially toward the end of a person’s life. If your health begins to decline you may worry that your family will inherit your medical debt rather than your estate assets.

Here’s what you should know about the impact medical expenses can have on your estate plan.

Debt has an order

When you die with outstanding debt, state and federal regulations govern which debts must be paid first. Repayment of these debts may need to come from the assets of your estate.

For most debts, if there are not enough assets to pay them from your estate the claimant is forced to “write off” the debt after attempting to collect the debt from your estate. There are, however, some circumstances where a loved one could be held personally responsible for your debt.

Know what you (and your children) sign

Nursing homes and assisted-living facilities can be important for both your medical care and your family’s peace of mind. Often these facilities provide quality, expert care when family members are unable to provide that higher level of support.

With round-the-clock care and trained staff, care facilities can be expensive. Some facilities will require your next of kin to sign a “personal guarantee” for payment of any outstanding bills.

When one of your loved ones signs a debt-assignment document, like a personal guarantee, they could be held responsible for debts not paid by your estate. As you consider how you want to handle end-of-life care decisions, you may also need to think about how your options and the related expenses could impact your loved ones.


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