Are Children Resonsible for Deceased Parents' Credit Card Debt?

Many parents run up large amounts of credit debt in their later years as they struggle on a fixed income, and their children may worry about whether they will be held responsible for the their parents' debt once they die. Although children are not responsible for the credit card debt, the assets in the estate must stand for any debts incurred before the amount is paid out.

Credit Card Debt Is Not Transferable

Credit card debt cannot be transferred to you once your parent dies. Contact the credit card company and inform it that your parent has died. You need to send a copy of the death certificate. Do not continue to pay on the debt since there may not be enough money in the estate to pay for the bills, and the debt will be forgiven because of the death.

Credit Card Ownership

If you are an account holder along with your parents on the credit card, you will be held responsible for the credit card debt after they die. To protect yourself from this, do not co-sign on a loan or credit card with your parents. If there is not enough money left in the estate to cover the bills, you will need to pay off the credit card debt or else it will affect your credit score.

Estate Stands for the Amount Owed

Your parents' estate must stand for all debts before you can receive any inheritance. This means assets such as a home, stocks or a car must be sold and the proceeds used to pay off all the debts before any money will given to the heirs. Although you will not be held responsible for the credit card debt, it may limit how much you receive for inheritance.

Settling with the Credit Card Company

The executor of the estate will need to send a letter stating the person has died as well as a copy of the death certificate. Once the assets of the estate have been liquidated, the executor will need to pay any outstanding debts the person had. The mortgage and car loans will be paid off with the sale of those items, and any remaining money will go toward credit card debt. If there is not enough to cover all of the debts, the executor will need to send a letter explaining that the estate did not have enough assets to cover the debt.