Interesting conversation with a friend of mine .

nomas

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The thing that strikes me as odd with this is the person is 65. Who knows how long they’ll live. I can’t imagine banks extend too much credit to retired folks unless they have a defined benefit pension or something tangible.

So this person racks up debts, pays the minimum. Wastes thousands on high CC interest for years. Probably maxes the cards out. Then what? The cards are maxed out. Can’t really use them then paying minimum payments that are primarily interest.

Maybe he scammed the bank out of thousands for a year or three, but he’ll be paying interest possibly for decades.
Let me fill in the blanks . I raised some of those points and he said that he has a couple of cards with nowhere near the limit on them . He's not running wild and racking up debt . He said that he could easily go buy a new vehicle and finance it with no problem any time he wanted . He just said that " I have no problem owing people when I die . "
 
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I don't understand your point .
Taking out a loan (credit) is a contract between the lender and the borrower. If I take out a loan, the lender performed their part of the contract. It is up to me to perform my part.
I cannot speak to the ultimate legality of this.

Plenty of people default on loans. We all pay for that. Just like tax deadbeats; the costs are still incurred.
Personally, I sleep very well knowing I have zero debt.

Again, some people seem to say, "It's my right" while others say, "It's my responsibility."
 

JHZR2

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When I take out credit, I am agreeing to perform my end of the deal. Dunno if this is legal or not, just my opinion.
When he’s dead what difference does it make to him?

Not saying it’s the right thing to do…

The estate will be forced to pay for it. He doesn’t seem to care. Seems stupid because the creditors will get theirs with max interest.

Unless he can transfer all of his estate to his heirs long before he passes. Then I guess he did get the creditors to hold the bag.
 

nomas

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Taking out a loan (credit) is a contract between the lender and the borrower. If I take out a loan, the lender performed their part of the contract. It is up to me to perform my part of the deal.
I cannot speak to the ultimate legality of this.

Plenty of people default on loans. We all pay for that. Just like tax deadbeats; the costs are still incurred.
Personally, I sleep very well knowing I have zero debt.

Again, some people seem to say, "It's my right" while others say, "It's my responsibility."
The " legality " of it is a complicated issue . I kind of doubt he told the CC companies that he has no intention of paying them off , There's no fraud until it actually occurs . And if the Estate pays the debt , who loses ? He never promised the kids an inheritance . It was a fun discussion and we drank a few Beers and had a good time with it .
 
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When he’s dead what difference does it make to him?

Not saying it’s the right thing to do…

The estate will be forced to pay for it. He doesn’t seem to care. Seems stupid because the creditors will get theirs with max interest.

Unless he can transfer all of his estate to his heirs long before he passes. Then I guess he did get the creditors to hold the bag.
Agreed, it makes no difference to him; he's dead. But those debts are ultimately paid by the greater society, including his children, you and me.
What does that attitude teach his children?

Legally you can gift $15K per year per person out of your estate; beyond that you incur a gift tax. I can also tell you that unless you have a huge estate, $15M or more, the feds will likely never know. But they might... Schwab advised me on this very topic.
 

JHZR2

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Agreed, it makes no difference to him; he's dead. But those debts are ultimately paid by the greater society, including his children, you and me.
What does that attitude teach his children?

Legally you can gift $15K per year per person out of your estate; beyond that you incur a gift tax. I can also tell you that unless you have a huge estate, $15M or more, the feds will likely never know. But they might... Schwab advised me on this very topic.
Agree on all counts.
 

4WD

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Agreed, it makes no difference to him; he's dead. But those debts are ultimately paid by the greater society, including his children, you and me.
What does that attitude teach his children?

Legally you can gift $15K per year per person out of your estate; beyond that you incur a gift tax. I can also tell you that unless you have a huge estate, $15M or more, the feds will likely never know. But they might... Schwab advised me on this very topic.
They tax you to death +1
 
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In Canada we have no inheritance or gift taxes. I shouldn't say it too loud because the tax people might be listening and discover a new revenue source.

Some provinces have huge probate fees ($15,000 per $1,000,000 here in BC). So there is a lot of money spent here figuring out how to avoid those probate fees. In most provinces probate fees are nominal, $200 or so.

To their credit the feds have created structures that enable avoiding those greedy probate fees.
 
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I personally hate debt-why give my money to the CCs, loan companies, or banks when I can keep it for myself? That’s one way I could guarantee living to be 100-blow everything & run up huge unsecured debts, spend my golden years in a homeless shelter or shivering under a bridge…
 

nomas

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I personally hate debt-why give my money to the CCs, loan companies, or banks when I can keep it for myself? That’s one way I could guarantee living to be 100-blow everything & run up huge unsecured debts, spend my golden years in a homeless shelter or shivering under a bridge…
You obviously missed the details of this conversation .
 
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Curious OP - does your friend own his house/house is relatively close to fully paid off (in other words decent equity)?

While its not my approach, I do get the lack of concern about kids inheritance as well as the approach to creditors.
 

Pew

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In IL, only your estate is and not your family.

In the end, my debt, my responsibility. But it's not like banks and credit card companies have ever 'worked for us' anyways so if I die tomorrow, the companies can kick rocks.
 
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There's nothing wrong with estate planning by giving away almost everything to ones kids and living off just social security since it can't be taken by creditors to settle debts....when I die I'm goin out holding up my middle fingers lol
 

nomas

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Curious OP - does your friend own his house/house is relatively close to fully paid off (in other words decent equity)?

While its not my approach, I do get the lack of concern about kids inheritance as well as the approach to creditors.
He says he has no mortgage , so I assume the house will be sold and his debts paid from the proceeds . He really doesn't have a whole lot of debt , He just doesn't care if he dies with a CC balance . :p

Also , I'm assuming he has a 401k because we have talked about it before . No idea of the value . If the kids are the beneficiaries then that money is safe .
 
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There's nothing wrong with estate planning by giving away almost everything to ones kids and living off just social security since it can't be taken by creditors to settle debts....when I die I'm goin out holding up my middle fingers lol
Giving away liquid assets has tax ramifications. Don't ask me how I know.
 
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