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Can You Inherit a Parent’s Debt?
Typically, you aren’t liable for Mom or Dad’s unpaid bills — but a few missteps could make you responsible
Ryan Johnson
Key takeaways
- Generally, you aren’t legally responsible for a late parent’s debt unless you’ve accepted liability through actions like cosigning a loan or holding joint accounts.
- A deceased person’s debts are settled during probate, and creditors must be paid before any money passes to heirs.
- If you serve as a parent’s executor and fail to follow state probate laws, you could face fines or jail time.
Many Americans may be worried that their parents will leave them with financial burdens rather than an inheritance. After all, 43 percent of boomers say their loved ones would need to pay their debts if they died today, according to a recent Policygenius survey.
But debt isn’t passed on the same way an inheritance is. “The general rule is that family members are not liable for the debts of another family member, absent special circumstances,” says Katherine Pearson, a professor at Penn State Dickinson Law.
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Still, understanding those circumstances is essential if you don’t want to be on the receiving end of a parent’s unpaid financial obligations.
When a person dies, their debts become their estate’s responsibility and are settled during a legal process known as probate. A probate court will appoint someone to determine what assets your parent had and what they owed to creditors. This job will fall to you if a parent named you as their executor in their will.
Shannon Miller, founder of Miller Elder Law Firm in Gainesville, Florida, recommends checking credit reports, bank statements and bills to determine if your late parent had any outstanding loans or lines of credit. You’ll need to notify creditors of your parent’s death in writing. To recover what they’re owed, they will have to file a claim with the probate court within a set period of time, which varies by state.
Your parent’s debts will be settled with funds from their estate. Creditors must be paid before any money passes to heirs, Miller says. If there is not enough money in the estate to cover those debts, creditors won’t be able to collect what they are owed.
But there are a few situations in which heirs can inherit debts.
When you may be responsible for a parent’s debts
In most cases, people inherit a debt only when they’ve actively accepted responsibility for it, says Harry Margolis, a Boston-area elder law attorney and founder of ElderLawAnswers.com. For example, if you cosigned a loan with a parent or opened a joint credit card, you would be responsible for paying the balance after your parent’s death.
If you serve as a parent’s executor, their debt could become your responsibility if you fail to follow state probate laws, Pearson says. That could lead to fines or even a jail sentence, she says.
In rare cases, you may be obligated to pay a parent’s medical bills or long-term care costs, depending on where they lived. Beyond the states that make children liable for burial costs, 18 states still have so-called filial support laws, under which adult children may be responsible for care costs their parents can’t afford. In some cases, claims can arise after the death of a parent.
“In the 1990s, we saw a wave of nursing homes going after family members for filial support laws,” Pearson says. “But that trend has pretty much died away.” Pennsylvania is the only state that has held someone responsible for a family member’s medical bills in the past 10 years, she says.
That said, you could be held liable for a parent’s unpaid care bills if you sign certain documents. For example, if you help a parent apply for care in an assisted living or skilled nursing facility, you might be asked to sign as a responsible party to serve as a point of contact, Margolis says.
“Sometimes these facilities interpret it as you’re taking on fiscal liability,” he says. “We tell our clients when they sign one of those to add ‘not as guarantor’ so there is no question.”
What to do if creditors are calling
If you’re named as executor and debt collectors are hounding you to pay your deceased parent’s debts, you have protections.
The Fair Debt Collection Act protects people from unfair, abusive and deceptive debt-collection tactics. Collectors must provide specific information about the debt, such as the amount owed and the name of the creditor. Collectors are allowed to contact you only between 8 a.m. and 9 p.m. and cannot contact you at work. They are also barred from contacting you by email or text message if you ask them not to.
“If you write a letter asking them to cease reaching out to you and they don’t stop, they are potentially in violation” of the Fair Debt Collection Act, says Berneta Haynes, an Atlanta-based senior attorney with the National Consumer Law Center.
If a nursing home claims that you are liable for a deceased parent’s bill, you might have protections under the Nursing Home Reform Act. This federal law prohibits nursing homes from holding third parties responsible for a resident’s debt. However, you’ll likely need an attorney to help you fight a nursing home collection lawsuit.
“This would be a lot of work for someone to do on their own,” Haynes says. You might qualify for free representation by a local legal aid office if you have limited income — typically defined as at or below 125 percent of the federal poverty guidelines.
How to head off posthumous debt issues
Talking to your parents about their finances while they’re alive can help prevent issues surrounding debts they might leave behind.
If your parent hasn’t already done so, encourage them to name beneficiaries on their retirement accounts and add transfer-on-death designations to brokerage and bank accounts — that way, funds in those accounts can pass directly to the beneficiaries without going through the probate process.
To limit your liability, avoid cosigning loans with your parents or opening joint credit accounts. Also, exercise caution when signing long-term care facility documents as a personal representative for a parent by confirming that you won’t be liable for their bills when they die.
The key takeaways were created with the assistance of generative AI. An AARP editor reviewed and refined the content for accuracy and clarity.
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