Estates, Not Heirs, Generally Pay the Debts of the Deceased
The debts of a deceased parent are mostly not passed on to children, though some exceptions exist. However, creditors can make claims on the estate, reducing the size of the inheritance. CNNMoney says creditors typically must make claims against the estate within two to six months of the deceased’s passing. If there is not enough money in the estate to cover the liabilities, the debt will likely go unpaid. Laws do vary by state, however. Additionally, an heir can be responsible if he or she co-signed a loan for the deceased parent.
Here are the basic rules regarding common types of debt.
Credit Card Debt: Credit card bills are payable by the estate. A credit company can only request payment from the estate’s executor. Heirs are not responsible as long as they are not a cosigner on the account.
Medical Debt: The laws vary by state and who the creditor is. Medicaid payments made on behalf of the deceased parent can be recovered from their estates under certain circumstances. Bills owed to hospitals or nursing homes may become the responsibility of adult children if a state has a “filial responsibility” statute. These statutes legally require adult children to care for their parents if their mother or father becomes indigent and the child has the ability to pay for care.
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