Their funeral arrangements have been prepaid for by their life insurance but they are in debt with credit cards and a morgage.
2007-09-18 01:43:07 · 19 answers · asked by Howie75 1 in Business & Finance ➔ Personal Finance
The answer is no. Parents can't leave their debts to you. In fact, they can't even leave their debts to their spouse.
Typically a will controls financial affairs after a person's death. A will distributes assets, not debts. But, before any money can be distributed to heirs, all the debts must be paid. So enough assets are sold to pay for any debts that remain. Only after the debts are paid will the remaining assets be distributed among the beneficiaries of the will.
Look at the website. This may answer some more of your questions.
2007-09-18 01:53:57 · answer #1 · answered by forrealgyrl 2 · 0⤊ 0⤋
Whomever is named executor of the estate will settle the debts if there are any assets available. If not the court will discharge the remaining debts through the probate process. Probate provides an orderly way for creditors to get paid before the heirs are given assets from the estate, to prevent creditors from getting left out in the cold. This is a good social policy, as otherwise older people would not have access to credit against their assets and would be forced to sell their homes and treasured posessions prematurely. The heirs get their share of what is left over, if anything. Children do not pay the debts of their parents to the extent the debts may exceed the value of the liquidated assets.
2007-09-18 08:54:27 · answer #2 · answered by John M 7 · 1⤊ 0⤋
The parents bills are their own; however, the credit card companies, banks, etc. can go on record as creditors. Any proceeds from the parents' estate would be used to pay the creditors first. So, though the children are not responsible, the estates of the parents are. The children may not receive anything from the estate, but they are not required to use their own money to pay down the deceased persons debts.
If it makes more sense to pay off the mortgage or cars and keep the house/cars/etc, that is a choice the children will have to make. If so, they would be responsible for paying off those specific items.
2007-09-18 08:51:59 · answer #3 · answered by Dorothy R 2 · 0⤊ 0⤋
If they have a mortgage they have a home and assets. When they pass they either have a will and there will be an estate, an executor who will sell the assets of the estate to pay the debits and the remainder will pass to the heirs.
If they pass without an estate, laws by state vary, but as a rule SOMEONE will claim the estate, the assets will still need to be sold to pay off the outstanding debits and the heirs will fight over the balance if there is any.
If when it's all said and done there aren't assets to cover the debits the people they owe lose.
2007-09-18 08:51:01 · answer #4 · answered by wizjp 7 · 0⤊ 0⤋
Unless the children are named on the accounts, they are not liable. The parents' estate is used to pay off any debts. If there is no money left, the debts do not become the children's responsibility. But the debts must be paid if possible by using any assets left in the estate. In this case, the house would need to be sold and the money used to pay back the mortgage.
2007-09-18 08:53:16 · answer #5 · answered by likepepsi 7 · 0⤊ 0⤋
First of all, the life insurance goes into their estate to pay the bills. It is considered an asset. All assets are liquified, making certain that records of all transactions are kept. All debts are paid with the proceeds and whatever is left, if anything, is split according to will or law.
2007-09-18 08:50:29 · answer #6 · answered by every1's friend 3 · 1⤊ 0⤋
The mortgage should be covered by some sort of life insurance policy which will pay it off. Then the outstanding debts will be settled before any disbursements are made to relatives/family - assuming there are any. I don't think creditors can chase family members for outstanding debts.
2007-09-18 08:48:49 · answer #7 · answered by Sal*UK 7 · 0⤊ 0⤋
In my mothers case, yes. The estate would have to pay for the bills. Therefore if all assets were sold, like a house, then that money would go towards paying the bills first. Of course, in my mothers case, a lot of this was done crookedly by one of the siblings and they all got to split practically nothing.
2007-09-18 08:58:33 · answer #8 · answered by Jennifer 6 · 0⤊ 0⤋
Yes, the debts are paid through the estate. If they have a mortgage they have property, and that will hopefully cover their debts, along with the life insurance.
2007-09-18 08:48:24 · answer #9 · answered by Landlord 7 · 1⤊ 0⤋
Often people have insurance on their mortgages and credit card loans. All assets and liabilities go into their estates and their debts are paid off first. It's always good to get advice on how they can protect themselves and you and how to lesson their heirs tax burden.
2007-09-18 08:49:49 · answer #10 · answered by judy b 2 · 0⤊ 0⤋