what should i do when my parents die and leave me their debt?

Question

my parents are not good with their money, they have a mortgage on trailer that isn't going to get anything on resale. my father is a truck driver, and isn't in the best health, my mother is doing fine, but anything can happen. i know that i am their beneficiary, they dont have life insurance, they dont have any 401k. they are just really really bad with their money, and have a ton of debt. if they die, will i be responsible for their debt?

Answer 1

Here in the UK any debts are taken out of anything that is left i.e. bank account etc. Debts in UK normally die with the person. I am not sure of legal standing in the US so check with a lawyer.

Answer 2

JS and Ricky Lee are correct. You are not responsible for your parents' debts unless you co-signed with them. If you intend to keep the trailer, however, you will have to maintain the payments and make arrangements to bring any arrearage current.

It is not wise for them to get insurance to pay off the debts. If they are in debt they probably can't afford any additional expenses. Additionally, many of the insurances that are sold with large ticket items are not worth the paper they're written on.
If it is disability insurance, the companies often claim the condition was pre-existing and will refuse payment. Depending on the solvency of the company, the insurance company itself could end up in bankruptcy

Encourage your parents to find ways to get out of debt and leave you with more than calls from bill collectors. They can check the Web site below for free help with their finances. Whatever assets they intend to leave you upon death should be given to you before they die; then the transfer will not have to be probated. If you are the only child, or the most trusted and responsible child, they should also add your name to their bank accounts. You will then be entitled to remove any funds from the account without a court order.

Your parents should check with an attorney concerning assets that they want transferred via a will.

Answer 3

Wow, a lot of short answers. There's a lot to think about here.

First of all, are you on any of their notes? I.E. Are you a co-signer for any of their loans? If so, I would start talking to them now about getting rid of - or at least getting a handle on - that debt. If they die (or stay alive, but just stop making payments) you are responsible for that debt.

The truth of the matter is that you won't inherit debt. However, their death's (especially with no insurance) may put you in debt. You need to start planning for things like plots, caskets, burials, etc.

When your parents die, their estate will be liquidated to pay for their debt. Essentially, the trailer will be sold and that money will pay off the mortgage, then any other debt (if there's money left over). The assets in the 401(k) will be sold and that money will pay for any other debt that they have.
At the end of all of that, if there's money left over, it will be inherited by the heirs (I'm assuming that's you).

I hope that helps. The most important thing is to have conversations with them NOW. "Mom, Dad - Let's talk about healthy lifestyles. What does your estate look like? Do you have - do you need insurance? Do you want to be buried or cremated? Etc."

Good luck, and hopefully you won't have to worry about this for a while.

Answer 4

No, you will not. I was the executor of my father's estate. When your first parent dies, the other parent assumes all assets and debts. When that remaining parent dies (or if they die together in a car crash or something) then the estate is passed on to the heirs. If that is just you (no brothers or sisters) than you automatically become the executor. If you have brothers or sisters, the executor is typically defined in their will...make sure they have one.

The executor goes about liquidating all assets (selling the home, cars, etc), and putting all liquid assets into an estate bank account. The account then pays what debts can be paid. The remaining debts go unpaid. You and your siblings (if you have any) can pay them if you want to, but you are NOT legally obligated to.

If really concerned about this, take out a term life insurance policy now on your father. Get him to sign it, with bills coming to you, but with you as the beneficiary. Then, when he dies you have some money to bury him and help your mom with the debt.

Answer 5

DISCLAIMER: NONE of the following can or should be construed as legal advice of any kind! Please speak to a lawyer and check your local laws for accurate advice!

Children are not typically liable for their parents' debts; unless you are liable for the debt under the original agreement (for example, if you co-signed a loan). Your parents' estate(s) will be responsible for the debt and if you are the executor of the estate(s) you may find yourself dealing with the headaches of creditors, selling off any assets so you (the estate) can pay off the debts, etc. You may also find yourself footing the funeral expenses. While you are not generally going to be liable for your parents' unsecured (ie credit card) debts, secured debts are a different story, because the property (ie the trailer) can generally be seized by the lender if the debt is not paid off. A caveat: if, for example, one parent dies and the other parent survives them and is still living in the home, it's possible the home would be safe from seizure, depending on how the home is/was owned. The relevant state will have laws about what debt has highest priority (and 2nd highest, 3rd highest, and so forth) for purposes of being paid off; things like mortgages and taxes are generally given a high priority, as are expenses related to administering the estate. Things like funeral expenses are generally given a lower priority.

DISCLAIMER: NONE of the above can or should be construed as legal advice of any kind! Please speak to a lawyer and check your local laws for accurate advice!

Answer 6

No you will not be responsible.

And they most likley will not die at the same time. After the first one dies (or before), try to help the other one erase their debt with a chapter 7 bankruptcy (in the US).

With the fresh start, and some guidance from you, maybe they can keep things in order and live a happier life.

Answer 7

you have not any legal responsibility for his or her debts. The resources must be settled, paying off debts that are remarkable. All money must be taken from the resources. although, there's a time that a lender ought to bypass once you. as an social gathering, enable's your mom and father hada restricted time last. They took out a own loan, and gave the proceeds to you, They died presently after that. it truly is termed a "present in contemplation of demise." think ofyou've got to pay decrease back the money.

Answer 8

You should not be responsible for any debt that was not under your name. The sale of their estate will first go to pay off the debt. anything after that is taken as a loss to the company that provided the loans. You will not be responsible unless you signed your name under those loads taking responsibility for them in the event of death or inability to pay

Answer 9

NOOOOOOOO!
You will only be responsible for the debt of an item you choose to accept

For example if the house has a mortgage and you inherit the house (and choose to keep it) then you will owe the mortgage

So don't worry ...OK

Answer 10

No, you will not be responsible for your parent's debt unless you have cosigned a loan or mortgage with them. It might just mean that you don't inherit much from them when they die.