This generation of Americans that has faced the great recession and the huge amounts of student loan debt promises to be quite debt conscious. As such, many younger people might be wondering: will I have to pay my parents’ debt after they die?
And, of course, the question becomes even more important because as some Americans age, they sometimes lose the interest in or ability to pay back their debts, be it car loans, mortgages, or credit card bills.
So what is the answer? Let’s ask the researchers at FindLaw.
Normally, someone's estate is responsible for paying the debts of the deceased. However, if there isn't enough in the estate to cover the debts, they typically go unpaid.
In general, you usually don't have a legal obligation to pay the debts of a deceased relative who was not your spouse. Even a spouse's obligation to pay may be limited under some state's probate law. To determine whether you're legally obligated to pay, talk to an attorney who is knowledgeable about this area of the law.
One thing you want to be careful about in the debts of a deceased relative, though, are co-signed loans. Anyone who co-signs a loan becomes liable for the remaining debt. So you should be cautioned against being a co-signer if you think an elderly family member will not pay.
There are other wrinkles in these rules, particularly if you live in a community property state (which New York is not). For example, one important exception would be that in community property states like California, or Texas, the property that couples acquire during marriage is owned by the "community" of both spouses. As a result, such "community property" is liable for debts incurred by either spouse during the marriage (regardless of personal liability).
So, will you owe your parents' debt after they die? Like most legal questions, the answer is, usually no, but it depends, so ask an attorney who specializes in this area of law.