For many families, their angst begins over the fair distribution of their parents’ assets and possessions when their parents have passed on. But other families face quite a different conundrum: Their parents died broke and with their finances in a mess.
Almost 50% of senior citizens die with under $10K in assets, as one research study from the past decade revealed. Conversely, the debt ratio among the same demographic group is rising unchecked. Nearly a quarter of senior citizens 76 years of age and older still grapple with mortgages, with another quarter mired in credit card debt.
What to do when your parents left unpaid bills and few (if any) worthwhile assets?
If you are the executor or administrator of your parents’ estate, you can expect the companies they owe to try hard to get you to pony up the funds to cover those debts. They will hassle and harangue you, try to guilt you into assuming responsibility for debts that are not yours. Some will flat-out lie to you and tell you that the debts pass to you.
The good news here is that you most likely don’t have any obligation to repay those debts, unless:
- You and your parent(s) applied for credit together
- You co-signed for a loan or other debts with them
In other words, if your name isn’t actually on a debt, you can’t be held liable for it.
Your parents might have been savvier than you thought
If they were fiscally responsible at all, they might have had the foresight to take out life insurance policies naming you as beneficiary and/or designating their bank accounts as “payable on death” to you and your siblings.
If that is the case, those assets skip probate entirely and become yours. Will your parents’ creditors still try to get you to pay for your deceased parents’ debts? Possibly. But understand that you have no legal obligation to do so.
Seeking legal guidance can provide clarity
If you are being pressured to assume responsibility for debts that are not yours, don’t buckle under pressure. Seek the counsel of an estate planning and probate attorney here in Sacramento so you are aware of and exercise your rights.