Am I Responsible For My Dead Parents’ Debt?
Dealing with your own finances can be overwhelming enough. If your parents pass away and you're left to sort through 50-plus years of finances, it can feel like a nightmare.
If you’re like me, this is what happens to you when your parents die: after four to five days of complete and utter collapse, you realize that you are now the main adult protagonist in the narrative of your life. With this realization comes several accompanying epiphanies, including the most common ones:
“My parents had way too much shit that they didn’t need, and now I have to get rid of it.”
“My parents had entire lives that I was completely unaware of — look at this picture of Dad holding two iguanas at a Russian circus.”
And most importantly:
“I was completely and utterly unaware of the intricacies of my parents’ financial status.”
This is what happens when your parents die and leave you bills to pay:
You learn that you may not be personally responsible for the $30,000 in credit card debt that Dad racked up from all of those golfing trips, but you will feel the personal loss when you no longer receive the savings that your parents were going to leave for you, if there were any. If your parents die in debt, in most cases the debt is paid off via their estate, which is still an indirect loss to you.
But what if there is no estate? What if there were no savings, just piles of unpaid bills and no one and nothing to pay them? The answer: it’s complicated. Very complicated.
All debt is not created equal.
Credit card debt? Most likely not your problem.
Medical debt? Again, not your problem, but Medicaid might hold the house as collateral.
Mortgage debt? Very often your problem. You inherit the house, you inherit the payments.
Bottom line: If your parents die and leave you in debt, then – if you’re anything like me – you’re going to contact about five hundred people to get as much advice as possible. Finances are exhausting when they’re your own, but catching up to speed on more than 50 years of someone else’s finances can be downright maddening. Don’t do it alone, and if you suspect that you will have to face something like this, start a conversation now, while they are alive and well!