Are You Liable for Your Deceased Parents’ Debt?

Advice For Caregivers

deceased parents debt

When your parent passes away, who is responsible for their debt? It depends.

When your loved one passes away, you are thrown into making many decisions and finishing up a variety of tasks to take care of their estate. It’s an overwhelming and emotional time that can often lead to confusion and family stress. For many children, they begin worrying about who is responsible for any debt from their deceased parents. Fortunately, most children are not liable for the debt their parents may have left behind.

Who Is Responsible for Their Deceased Parents’ Debt?

deceased parents debt

Most children worry if they will be held responsible for the debt their parents leave behind

In most cases, children are not liable to pay their deceased parents’ debt. However, if the child was a joint account holder for a credit card or was a co-signer for a loan, they are liable for the remaining balance.

It’s important to note here that being an authorized user for a checking account is different than being a joint account holder for a credit card or loan. It is common for a senior to give one or more children authorization to use their bank account. Being an authorized user allows the designee to write checks on behalf of the senior in order to help with financial tasks. For example, Edna makes her daughter Karen an authorized user of Edna’s account. This means that Karen can help Edna by writing checks and paying bills on Edna’s behalf and she will not be liable for Edna’s debt.

In contrast, if Karen and Edna open a credit card together, it makes them joint account holders. In this case, Karen would be liable for any credit card debt Edna leaves behind on the joint credit card. Similarly, being a co-signer or co-guarantor of a loan means you are responsible for payments remaining on that particular loan. Should you even be a joint account holder with your parents in the first place? Consider reading Joint Accounts Are Usually Bad first.

What About Medical Debt?

If your loved one passed away after a long medical history, you might find medical bills arriving months after the death. Medical bills can be paid off using money from your loved one’s estate, if the estate has money to cover the costs.

However, it is important to consult with an elder law attorney or to check your state’s law regarding medical debt. Currently, there are thirty states that have filial responsibility laws. This means that family members are responsible for paying for unpaid medical debt that the deceased parent’s estate cannot cover. In these cases, hospitals and nursing homes can seek out repayment from next of kin. However, it is uncommon for this to happen, even in filial responsibility states.

Your Deceased Parents’ Home

deceased parents debt

Working with an experienced elder law or estate attorney can ensure the process is handled efficiently

Many seniors pass away while still owing money on the mortgage of their current home. If your loved one passes away with money still due on their home, you are not responsible for making those payments. However, you will need to repay the loan from the estate after selling the home. This is similar to if you would sell your home now; you would pay off your current mortgage first with the money you earn from the sale.

For family members who inherit the home via a will, they are responsible for making monthly payments per the mortgage to keep the loan current. The bank will typically not require the home loan to be paid in full right away. Instead, you can continue to make monthly payments until you decide what is next for the home.

What About Home Liens?

If your loved one owes past medical bills or back taxes, liens can be placed on your loved one’s home. Tax agencies, both federal and state, are often given top priority for debt repayment and can put a lien on your loved one’s home in order to ensure the debt is paid when the house is sold. Other agencies, like hospitals or various creditors, are also allowed to put a lien on a home in order to ensure debts are paid as the estate is settled.

What To Do When A Parent Passes Away

If your parent passes away, it is important that you designate someone to help you in the immediate aftermath of reporting the death. Call the number on the back of any credit cards to inform the company of your loved one’s death. When you are ready, you can begin to call companies and organizations as you receive bills. Let the agency know your loved one has passed away. They will then close any account, which will help to eliminate the chance of identity theft and fraud, as well as set up any final payments that will be due out of your loved one’s estate.

When possible, it is wise to consult with an elder law or estate attorney to ensure your loved one’s estate is handled quickly and efficiently. Unfortunately, many family members try to navigate the estate process on their own and inadvertently miss deadlines that can cause increased debt on their loved one’s estate. Working hand in hand with an experienced attorney is well worth the investment in the short and long term.

Quick Takeaways About Deceased Parents’ Debt

When your parent dies, in most cases, you are typically not responsible for the debt they leave behind. However, the executor of your loved one’s estate will need to take care to pay off debt from the estate promptly and efficiently in order to decrease late fees or other payments.

  • Work with an elder law or estate attorney to ensure the process is handled appropriately and efficiently.
  • Double-check to see if you live in a filial responsibility state; if so, you are liable to repay your loved one’s medical debt.
  • Agencies can put a lien on your loved one’s home in order to ensure debts and taxes are paid off.
  • You must make monthly mortgage payments after your loved one passes away to keep the loan current.
  • Designate someone to help you cancel credit cards or inform agencies of your loved one’s death, especially during the first few weeks or months while you work with funeral arrangements and with processing your grief.