You have talked with your parents about their estate plan over the years, and you know that you are going to inherit certain assets during probate. Maybe you have seen how they divided financial assets between you and your siblings, for instance, or you know that you are going to inherit the family home jointly.
But as their estate goes through probate, you may also find yourself wondering if you are going to inherit their outstanding debts. This could include property taxes, income taxes, credit card payments and much more.
As a general rule, the answer is no. Debts are not inherited in the same way as assets, and your parents’ debts are not going to be passed down to you just because you are their child. Instead, creditor claims—which do still need to be paid—can be handled by the estate.
Who takes on this obligation?
This is one of the duties that should be handled by the estate executor. If the estate has remaining financial assets, creditors can make claims, and the executor pays those claims prior to distributing the assets to beneficiaries.
In other words, if your parents still owed $20,000 in outstanding credit card and tax debt, that may need to be settled first. You will inherit less money than you would have otherwise. But you do not directly inherit their debts, and you are not responsible for making future payments.
Handling both assets and debts is a key part of probate, and it is crucial for those going through this process to understand exactly what options and legal responsibilities they have.