Avoiding family debt

It’s natural to want family to go through as little additional stress and upheaval as possible when we are gone.

We see numerous TV adverts promoting life insurance to help assist with funeral costs to save loved ones from financial burden, relieving pressure at what is a difficult time.

There’s also generally a sound understanding on the importance of creating Wills – again, reducing emotional stress and ensuring the Will maker’s wishes are carried out.

But what happens if an individual’s estate is not in a healthy shape when they depart and, instead of assets to be distributed, debts – sometimes significant – have accrued?

Whilst an individual’s debts on death are typically paid out through the value of their estate, this is sometimes not possible if the debt is greater than the value of assets. There then becomes a real risk that, rather than leaving a financial legacy to family, they instead inherit debt.

The good news is that there are effective ways to mitigate this risk and ensure your estate – and the future of your loved ones – are in the best possible shape.


Here are some ways to start that process today:


As alluded to, insurance is a valuable way of mitigating against an array of circumstances – some foreseen and some unforeseen – and can offer great peace of mind.

There are a number of insurance policies that vary in scope and it is worth speaking with a professional to ascertain the best approach. These include but are not limited to:

  • Life insurance – a designated beneficiary will receive a cash sum on death, while some policies will also pay out for various circumstances such as critical illness
  • Mortgage cover – particularly effective and pertinent if you share mortgage commitments with someone, such as a spouse. Could they continue payments on their own? This cover can remove a huge burden if you die, especially if a significant loan remains on the property as this could impact not only anybody you share a property with, but also wider family members if significant loans remain outstanding and need to be repaid
  • Death in service – some employers offer a death in service benefit which will see a designated beneficiary receive a lump sum in the event the employee dies whilst still on the payroll, reducing the risk of financial hardship for the family that remain


Prevention better than cure

While there are ways to minimise and mitigate against family members inheriting debt, the truth is that the best way to ensure we only leave positive things behind when we go, are to maximise our wealth and financial wellbeing whilst alive.

Investments and saving accounts – these are incredibly wide-ranging and certainly not a one-size-fits-all approach. Different options will suit different situations – such as aptitude to risk and level of wealth.

However, what isn’t in question is that savvy and well-judged investments and saving accounts tailored to an individual’s needs can offer long-term financial security and, potentially, prosperity. It’s always worth talking with a professional to ensure the right fit.

Family budgeting and money management – there are many positive habits and long-term techniques that can be adopted to help keep your credit score healthy and ways to counter debt before it becomes a significant problem for both you and, potentially, your family in the future.

A reputable wealth management provider will offer a range of services, options and advice bespoke to you.


We all want to leave a positive legacy to the ones we care about the most – both emotionally and financially. Whilst not everything is in our control, we can certainly take the steps needed to ensure that, from a financial perspective, we leave our estate in the best possible health. If you’ve found our article insightful on avoiding family debt then please take a look at the contact below and see if we can provide you with advice or tips.m

Why not get in touch with our friendly, experienced and expert team at Wills & Trusts today to see how we can help build your future and cement your legacy.

James Jugg

September 3, 2021