If my parents die, and they are in debt, will I be stuck with that debt?

They have no insurance, and are thousands of dollars in debt. When they pass away, what will happen to that debt? Will I have to pay it?

Best Answer:

vaughan: Most parents work hard throughout their lives to make sure that when they pass away, their children will be left with enough money to support themselves. They purchase life insurance plans, they store adequate money for retirement and they make sure that their debts are paid long before it can become an issue. Some parents, however, fail to meet this goal, and pass on with more debts than their estate can conceivably cover. When this happens, their children are often concerned about the possibility of inheriting their parent's debts.

Thankfully, the short answer is, no, you cannot inherit a debt, as long as you have no stake in that debt. For example, if your mother failed to pay her credit card debt, and you were not listed as a cardholder on that account, you would not be responsible for paying that debt. If, however, the credit card was held jointly between you and your mother, you would be responsible for taking care of that debt. The same goes for joint checking and savings accounts that are overdrawn or mortgages that are taken out in both your name and your parent's name. However, as long as your name isn't tied to a debt, you aren't responsible.

When a person passes on, his or her "estate" is managed by the executor of his or her will. If no executor was named by the deceased, then the probate court will appoint an executor to distribute money and assets. However, the beneficiaries in the will are second to any outstanding debts owed by the deceased. None of the beneficiaries will see any money until those debts have been settled.

In that way, it may seem as though you are inheriting your parents' debts, but it isn't money taken out of your pocket; rather, it's money that you will never see.

One way that people try to circumvent this process is by distributing their assets – such as their house, their stocks and bonds and any money they have stored away – before they pass on. They believe that, by doing this, they can avoid paying creditors can can still leave money and assets to their children. Realize, however, that creditors have the right to legally petition to have those monetary gifts reversed after the debtor passes on. Even if you receive money or assets before your parents die, you might have them taken away by creditors afterward.

That will answer your question!

Other answer:

vaughan:
Without insurance (and some debt includes insurance on that debt) the creditors would apply to have the debts paid from your folks estate. If there is any money left over, it will be yours. If there is too much debt to be paid off, the creditors will share what money there is. You will not inherit the debt.
User:
No. You can't inherit debt. You have nothing to worry about. It can count against their assets, but it can only lower the amount of money you get. It can't go below zero.
Stoo:
No, but everything they have will have to be sold to pay off debts. You wouldn't get any inheritance of anything of value, it would go to their creditors.
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my 2 cents:
You will not have to pay the debt.
Judy:
no. But anything they own would have to go toward paying it

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