Legal Guidance From Attorneys Who Care

What happens to debt when someone passes away?

On Behalf of | Dec 29, 2023 | Estate Planning

When an elderly parent passes away, adult children are sometimes concerned about debt. Maybe it was an unexpected passing, so they know that their parent hasn’t taken care of things like auto loans, mortgage loans or credit card payments. But even if it was expected, there may be issues like property taxes or income taxes.

The concern that adult children often have is that they are going to be responsible for these debts. They worry that the assets are going to get passed down to them in the will and that those debts will also get passed on. Is this how it works?

Paying off the debt

It is true that debt isn’t just erased when someone dies. If that person owed the government taxes, the IRS will still want those payments. Credit card companies will still want to be paid on time. A mortgage lender still wants to get monthly payments or they may decide to start the foreclosure process.

But adult children generally do not have to worry about making these payments, at least if they did not cosign on any of the loans or lines of credit. Instead, this is a job for the estate executor during the probate process. They are in charge of making an inventory of the remaining assets and distributing them, and this sometimes means paying off the debt before splitting the remaining assets between the beneficiaries. In other words, the executor uses the money from the deceased person’s estate to pay their own debts.

This does mean that children are often not responsible for the debt on their own, but it is also a complicated process. Those who are going through it must understand all of their legal options.

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