If your parents pass away with a lot of debt, you’re probably going to find out about it as you go through the estate. Perhaps you’ve even been named the estate executor.
You may be concerned to see this debt, especially if you realize the estate can’t cover it. The assets just aren’t there. Are you going to have to pay the difference?
It’s rare for a child to have to cover their parents’ debts
It is uncommon for you to have to pay in this situation. There are some ways that I can happen, such as if your parents took out a loan and you agreed to co-sign on it. In that case, you are agreeing to make the payments when they can’t, and this is clearly a sign that the creditors can come to you for those payments in the future. It doesn’t matter if you and your parents had an understanding that they would make the payments. If you co-signed on it, you are legally responsible.
In most cases, though, the payment of debts is just up to the estate. If your parents don’t have enough money in the estate to cover it, the creditors may just be paid out as much as possible and some other assets may need to be sold. This means you’re not going to inherit the money that has to go to the debt, but it doesn’t mean that you have to use your own money to try to pay off whatever else is there. That balance just goes unpaid.
If you have found yourself in a tricky financial situation or if you have other important questions, make sure you know exactly what steps you should take so that you don’t look overlook anything.