Are you worried about your parents’ debt? It may not just be the fact that these debts are concerning now, while your parents are still alive. But if they have an excessive amount of credit card debt or something of this nature, you may be worried as one of their beneficiaries. You expect to inherit financial assets, real estate and other belongings from your parents, but does that mean you’re also going to inherit these debts—that you then have to pay off?
Thankfully, you don’t have to worry about inheriting debt. Unless you were cosigned on your parents’ credit card account, you’re not responsible for anything that they charged. You also wouldn’t be responsible for paying property taxes, income taxes, mortgage payments, car payments or anything else. These responsibilities stay with your parents.
The personal representative pays down some debt
One thing to keep in mind, though, is that the personal representative of the estate is in charge of administering that estate after the elderly person passes away. One of the responsibilities they have is to pay debts and taxes. Creditors may make claims against the estate, or the government may contact the representative to get the final tax bills that are still due.
This could reduce the overall value of your parents’ estate. If they only had $30,000 to leave you, but they also had $15,000 in credit card debt, some of the money that was intended for you may need to be used to pay down those debts in advance. So your own inheritance could shrink, but you don’t have to worry about directly taking on financial obligations or suddenly having a lot of debt that will impact your credit score. Debt is not inherited in this fashion.
If you’re going through the probate process or drafting an estate plan yourself, be sure you know about all of the legal steps you’ll need to take to address assets, debts and other issues.
