Myth-Buster: Am I really responsible for paying off my loved one’s debt?

Updated: Mar 29

This is an oldie but goodie. One of the top questions we are asked is regarding debts of a deceased loved one. There are a lot of myths floating around on this topic. Let’s bust them!

You’re inheriting your loved one’s estate- does that mean you are inheriting his or her bills? Let’s talk about in the case of parents. Generally, heirs are NOT responsible for their parents’ outstanding bills. While creditors can go after the assets in the ESTATE to satisfy debt (potentially reducing what ultimately is given to heirs), in general, they cannot come after you personally.

For unsecured debts (i.e. credit cards, personal loans, medical bills), an heir is NOT responsible- UNLESS you were a co-signer or joint account holder of some sort. In those cases, you can ultimately be responsible for the debt. Otherwise, unsecured debts held by the deceased alone are NOT your personal obligation.

With SECURED debts, lenders can repossess the underlying asset if it is not repaid (i.e. a house, or a car). Failure to keep these debts current will not preserve the equity in the property and impact the ability to transfer or sell it. For example: if the secured debt is a mortgage, and payments are not kept current, the lender can take the house- the same house you were due to inherit!

When real property (land or a house) is involved, things can get a little tricky when it comes to inheriting. As a matter of fact, what happens to your loved one’s property after they pass can become a complicated process as a whole. It’s better to prepare on the front end to avoid as much confusion as possible on the back end. Talk to your loved ones today and give us a call to assist you!


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