Not so very long ago, it was considered quite rare for senior citizens to leave mountains of debt behind when they passed away. But nearly a quarter of today’s boomers are dying with mortgages still in place on their homes, and another 26% are leaving behind unpaid credit card debt. Even those without significant debts are passing with less than $10k in assets and resources, including cash.
So, who is left holding the financial bag? The adult children? Not exactly (in most cases), but never feel that your parents’ financial status cannot affect you.
You are not responsible for your parents’ debts
Unless you co-signed for a mortgage, car loan or line of credit for your parents, you have no legal duty to repay their creditors. However, you can expect a full-court press from those whom they owe to appeal to your sense of moral obligation to repay what your parents couldn’t. But please understand there is no law on the books that can compel you to pay debts accrued by your parents.
How your deceased parents’ debt load could still affect you
If you were hoping for a speedy resolution to the probate of the estate, having outstanding debts can not only prolong the process but severely reduce the amount of what remains. In rare cases, you could be forced to sell off promised assets, like gun collections, a car or an heirloom piano.
If you truly want to help your parents avoid dying with debts, you will need to have some difficult financial conversations during their lifetimes. You can help them get their finances in order by scheduling appointments with financial agents and estate planning professionals to preserve what assets they do have to pass on to you and other beneficiaries.