Taking out a personal unsecured loan for my child.
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Taking out a personal unsecured loan for my child.
My daughter has 25,000 credit card debt and is unable to get a loan with her credit score. Even putting her on a loan as a co-signer would increase the interest rate. So, I am getting the loan in my name only my husband will not be on the loan either. However, if I should die, I want to stipulate in my will that my daughter continues to be responsible for paying this loan as I do NOT want the money for the loan to be paid out of my estate. Is there a special form that can be filled out to satisfy this that I can have my daughter and I sign? Best steps to get this done?
Asked on April 19, 2017 under Estate Planning, Illinois
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
You cannot do this: your will cannot obligate another person (your daughter) to do anything, such as paying a loan for you. The will only affects the distribution of your own property, nothing else. The best you can do is write you will so that either:
1) whatever amount your daughter would otherwise inherit will be reduced by the then-outstanding balance on the loan (e.g. if $15k is still owed, and your daughter would otherwise receive money and property worth $60k, she will only get $45k); or
2) that you daughter must pay in full or refinance or take over the loan before probate closes, and otherwise makes sure the estate doesn't pay anything, in order to inherit, or else she will get nothing--but if she is willing to forgo the inheritance, the debt will remain a debt of your estate (all you can do is offer her an incentive to pay it--you can't force her to).
Decide what you want, then consult with an attorney to draft the will the proper way.
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