By the year 2020, according to the US Census Bureau, the population of 65 and older is projected to be over 54 million. As the general American population ages, many children will inherit their parents’ savings and other will inherit their parents’ debt. Who will pay for those debts is a question hanging over survivors' heads and, while you are not legally required to pay those debts, you do have responsibilities when your parents die.
Your Debt Responsibilities
If your parents passed on with unpaid bills such as credit cards, medical bills, or loans, you, according to MSN’s Money Central, are not responsible for paying those bills. That said, as surviving family, you may hear from aggressive creditors pressuring you to pay. For the most part, you can ignore those calls or letters, with a few exceptions. If you co-signed a loan, for example, you are a joint account holder, say, in an auto or home loan, or if you held the power of attorney over your parents' holdings and freely spent their money, then you are obligated to pay their debts. For all else, you do not need to pay.
Your Parents' House or Car
If your parents still owed on a house or a car, according to MSN’s Money Central, you’ll need to find a way to make those existing payments or face the possibility of losing the property. At this point, you will need to make a decision. You can either try and sell the property — whether it is real estate such as a family home or an auto — or try to find enough money within the estate to pay for these personal holdings. Selling-off your parents' house might be a painful decision but you’ve got to find a way to keep the accounts current, or risk having those holdings be taken away.
Death is a painful, sorrowful time, but, as a child, especially if you were the executor, you have some serious responsibilities, according to MSN’s Money Central. If your parents were in debt, one of the first tasks is notifying any creditors and lending institutions of the death. With debt involved, these might be uncomfortable calls but they are necessary. You’ll also have to think about paying any unpaid medical bills and, of course, the funeral. Settling those payments first will most likely take precedence over an old credit card bill. If you are an executor, you have the additional responsibility of cataloguing all debt and assets as well as finding tax information, banking statements, and other financial statements.
If you have a suspicion that your parents are living in debt, you can take some steps to prepare for the inevitable. According to MSN Money Central, consider having a conversation about burial wishes and, if you have siblings, discuss together how you will pay for funerals and burial services. Also look into financial solutions such as having your parents declare bankruptcy so as to settle debts prior to death. All of these steps are difficult and possibly painful to discuss with people you love, but they can save a lot of grief later when you should be grieving the memory of a parent you loved and not worrying about the financial mess left behind.
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