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this post was submitted on 14 Jan 2024
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Yeah this is definitely missing a step somewhere. The loans have to be paid off even if you're dead. Before your kids get anything your assets are used to pay off your debts. Unless there's a loophole in there where the kids can assume the debts and somehow get the assets tax free, then this post doesn't make sense.
**Edit: Ah ok the loophole is in allowing the heirs to use step up basis when inheriting the assets. The whole lifetime gains on the assets goes untaxed.
Yeah that's a big loophole.
Debts will also only get paid out of their estate and never transferred on to kids or family unless it is using a joint account or the inheritors explicitly accept it. If they transfer the assets before they die, then die with 0 assets and a ton of debt, the debt just disappears (as far as their family is concerned).
Unless I am understanding that loophole wrong.