Are Adult Children Responsible for a Deceased Parent's Debt?

When your parents leave debts behind when they die, you will not be directly responsible for the debt. However, the debt can negatively impact your inheritance and will have to be paid if some assets are still left to pay them. Otherwise, debt will be forgiven by the creditor at that point.

Inheriting Debt

When your parents pass away with a debt, you will not simply take over the debt when they die. For example, if your parents racked up a credit card debt, you will not have to come up with the money to pay for that credit card debt when they pass away. The credit card company may try to contact you and ask for payment, but you are not legally obligated to pay for the debt.

Affecting Inheritance

Although you are not technically responsible for the debt when your parents pass away, it can negatively impact the amount of assets and money that you are able to inherit. When an individual passes away, creditors must be paid from the assets left in the estate. This means that all of the outstanding debts must be paid before you can inherit anything from the estate. If the debts are substantial, they can hurt your chances of inheriting anything.

Joint Accounts

One situation in which you could inherit debt is if you have a joint account with one of your parents. For example come in some cases, adult children will get joint credit card accounts with an elderly parent. When this happens, you will typically be responsible for the debt when he passes away. If your name is on the account, you will be held liable for the debt by the credit card company. The credit card company will expect you to start paying the bill or you will face legal action.

Secured Property

When your parents had secured loans, those loans will also have to be dealt with before you can inherit anything. For example, if your parents had a mortgage debt, it will have to be paid off. This can be done by refinancing the mortgage if you want to keep the property or you can simply allow the home to be foreclosed upon by the lender. You could also try to sell the house and pay off the loan if it has enough equity.