Borrow Until You Die?

Ken Anderson

Ken Anderson

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Despite the life insurance ads, your children are not responsible for any debts you leave behind after death, although it is true that your debtors can go after your estate, so if you have property and financial assets that you would like to leave to your children, your debtors may be able to dip their hands into the pot first so, in that sense, your children will be indirectly responsible for your debts.

However, many seniors don't own their own homes, or may not have substantial financial or other assets, but are living off of their Social Security and any other income they can come up with. For them, there is a financial theory that it might make sense for them to borrow until they die, assured that their debts will not follow them into their graves, allowing them to live their final years without struggling with debts.

I'm not suggesting this; just bringing it up as a discussion item. It's not a perfect solution, obviously. For one thing, you might live longer than you think you're going to. Another that might be a consideration for some, and not so much for others, is that of leaving a legacy as a deadbeat. Also, of course, there are moral or ethical considerations of taking on debts that you don't intend to pay.

Just food for thought, or fodder for discussion.
 
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To my way of thinking, that is just another form of stealing and it is wrong no matter how a person tries to justify it. If you agree to credit terms to repay the financial institution, you have given your word to do so. I understand extenuating circumstances and bad luck can often interfere with good intentions, but using credit to simply buy things you want and intentionally leaving big debts shows a total lack of integrity.

I recall a person on SOC1 bragging that she had no intention of paying her credit cards off before she died like it was some kind of great financial plan.

I realize that some people fall on hard times, or have unexpected bills that they can't repay (medical or other emergencies, etc), but that is a totally different situation.
 
There are places you inherited the estate lock stock and barrel. A close friend of mine found out the hard way. Then you have places including US states where children can be called to spend on the parent.
 
Ken Anderson said:
I brought it up not to recommend it but because it is a scheme that is being promoted in podcasts and elsewhere, so I thought it would be a good topic for discussion. For some, it is a financial plan.
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I understand your point. Sadly, that is the way the world is going now. People have no integrity and feel no remorse for stealing, destroying property, rudeness, or generally being a jerk. Almost like they don't have the capacity to feel shame. It's a "me first" world and I'm not too upset that my time in this new world is limited.
 
Before we moved here in Kansas- we owe anyone anything, just monthly expenses. The ONLY reason that was possible was due to an inheritance. We do not even come close to what some have socked away investments. Careful planning, a a bit of cash tucked away, we were fine. First 2 years here fine, things started to creep up last year.
One we only have Medicare and Rx plan. Still our debt at the moment is trivial and no real worry.
However certain things have cropped up that might accidentally put us in debt..medically speaking . That concerns me as most of us are are seconds away from medical emergency, that costs a lot.
Still, feel very fortunate to have made it this far and do not have to re perk coffee grinds, spilt or skip meds, or an other money saving habits
I would not want to borrow money for anything today, We hv one credit card- emergency purchases or small pay off that month.
No balances owed. The only bills we have are medical and so far that is under control..how long, I am not sure.
 
You may disagree, but I personally see no shame in unpaid medical bills as long as you're not just stiffing them because you'd rather use your money elsewhere, but, with Medicare and the possibility of qualifying for Medicaid, or your state equivalent, I'd think that most people shouldn't have huge medical bills that aren't mostly paid through these programs. There are exceptions, of course. The better cancer centers often won't take Medicare, but I don't think they're likely to let you run up an unsecured bill, either. Of course, not every cancer diagnosis requires the best cancer centers in the country; I've had cancer twice, and I didn't have to pay much out of pocket at all, and the first time I wasn't on Medicare yet.

However, if you get hit with something major before you qualify for Medicare, I can certainly understand that medical bills can reach far higher amounts than many of us are able to afford. A friend of mine, a fellow paramedic, was diagnosed with kidney failure and associated problems. As soon as he reported the diagnosis, he was fired by the private ambulance company he worked for due to his compromised immune system, which was cold but, in some ways, understandable given the very low profit margins that small, private ambulance companies live by. He was able to qualify for a kidney transplant and received it, but it failed, and he died not long after.

When he couldn't afford his rent, I gave him a room in my house, and he'd receive medical bills in excess of $100,000, and it was like, what are they going to do, repossess his kidney?
 
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I agree about medical bills and any other catastrophic event. Some things are just beyond our control and our financial ability. Besides, if they can give free treatment to indigents and illegals, why should a senior with limited resources worry about being bankrupted by the healthcare system.

That is a totally different scenario to just buying unnecessary things on credit with the intent of not paying the bills. This is clearly not a "one size fits all" topic because there are many variables to consider.
 
Yes, there are several variables. The idea behind the "borrow until you die" philosophy, though, seems to be focused on getting as much stuff as you can on credit, then not pay the bills, so that you can have as much stuff as you want in your last years.
 
I got all my credit cards paid off maybe 20 years ago, and haven't had one since. Other than my monthly expenses, I have no debt.

Also, I consciously decided a few years ago that, when I die, I will make it as easy as possible for my children.

It may sound maudlin, but I've been getting rid of as much 'stuff' as possible. I don't want them to have to sift through my junk, trying to decide what to do with it.
 
Ken Anderson said:
You may disagree, but I personally see no shame in unpaid medical bills as long as you're just stiffing them because you'd rather use your money elsewhere, but, with Medicare and the possibility of qualifying for Medicaid, or your state equivalent, I'd think that most people shouldn't have huge medical bills that aren't mostly paid through these programs. There are exceptions, of course. The better cancer centers often won't take Medicare, but I don't think they're likely to let you run up an unsecured bill, either. Of course, not every cancer diagnosis requires the best cancer centers in the country; I've had cancer twice, and I didn't have to pay much out of pocket at all.

However, if you get hit with something major before you qualify for Medicare, I can certainly understand that medical bills can reach far higher amounts than many of us are able to afford. A friend of mine, a fellow paramedic, was diagnosed with kidney failure and associated problems. As soon as he reported the diagnosis, he was fired by the private ambulance company he worked for due to his compromised immune system, which was cold but, in some ways, understandable given the very low profit margins that small, private ambulance companies live by. He was able to qualify for a kidney transplant and received it, but it failed, and he died not long after.

When he couldn't afford his rent, I gave him a room in my house, and he'd receive medical bills in excess of $100,000, and it was like, what are they going to do, repossess his kidney?
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You are a compassionate man. Thank you.
 
Well, it all depends who you borrow from. I suspect many a death was because of unpaid debt. It started with broken knee caps but the idea of paying back in a timely fashion, didn't sink in, so a Louisville slugger was used to soften up hard heads. :ROFLMAO:
 
As far as I can determine this has become topical lately due to leftist politicians and complicit media trying to whip up medterm election voters. The message gets distorted, starting at "eat the rich" fantasy and then morphing into some "vituous deadbeat" mythology.

There is a nugget of truth in it, but one impractical for most people, only a small fractional source of income at best, and requires solid accounting attention and estate planning... as well as non-trivial assets.

The core of it is the "step-up in basis" provision for inherited assets. Those assets being hard assets like real estate, collectibles, and gold or soft assets like a significant investment portfolio.


The strategy is to derive an income stream from borrowing against those assets and never repaying the debts until death. At that point the appreciated assets are sold to an extent that retires that debt. Heirs walk away with any excess value beyond that debt.

This video tries to outline the mechanism without running too long:



None of it applies to unsecured personal debt like credit cards or student loans or unpaid bills - medical or otherwise. It just doesn't.

I'm no financial planner or tax consultant or estate attorney - but I have read enough on this to know that I would need one.
 
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