Do children have to pay their parents’ debts?

On Behalf of | Mar 16, 2024 | Probate

Children inherit their parents’ assets in most cases. Parents certainly can pick other beneficiaries if they would like, or they can disinherit certain children. But as a general rule, these adult children are going to expect that they will inherit tangible assets, like the family home, and financial assets, like savings or life insurance policies.

At the same time, though, these children may find themselves concerned that they’re going to inherit their parents’ debt. Maybe they know that their parents have business loans, car loans, home mortgages or significant credit card debt. Do they have to take on these obligations?

The estate administrator pays off the debt

No, children should not inherit their parents’ debts because the estate administrator should pay them off before distributing assets to the beneficiaries. The administrator has access to the accounts and can use the estate’s own funds to pay down these debts. Children may end up inheriting less than they expected if there is substantial debt that has to be paid first, but they don’t take on that debt themselves.

After all, it’s very common for at least minor debts to remain when someone passes away. Maybe they haven’t yet paid their property taxes or filed their income taxes. Maybe they have a small balance on a credit card that they used for daily purchases. These debts remain, but they can all be handled without the next generation having to worry that they will be paying personally.

Financial issues can lead to serious disputes during the estate administration process. Those involved in such disputes need to know about their rights, their obligations and the legal steps they can take.

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