When a parent dies, there are a host of issues their children are forced to deal with. First and foremost is the pain of the loss. Losing a loved one is never easy, and this is especially true when the loved ones are your parents. Beyond the emotional trauma, the death of a parent can leave a number of other issues that need close considerations – what happens to their property? Will the home be sold or will one of the children take over? What about a business? One issue that may not be considered though is debt. What happens to that? You inherit property and assets, so can you inherit your parent’s debt after their death?
Debt and Death
When a person dies, what happens to their existing debt? Often, many assume that the debt burden may be passed down to their children. Fortunately, this usually isn’t the case. In most instances, children do not have to foot the bill for their parents’ debts after death. They may, however, experience a much smaller inheritance should creditors go after the debt. This is because creditors are allowed to deplete a person’s estate, including assets set aside for inheritance, to help settle any debts which remain.
Creditors generally have a window of between two to six months in which to make claims against a deceased person’s estate. And, if your parents did not have enough assets to cover the debt burden they left when they died, the remaining debt often dies with them.
It’s important to note, however, that if any monies or assets associated with the estate can be used to serve the debt, they must be used before any of the estate is turned over to the family. This means that if your parent had a retirement plan or a 401(k) which a child thought they would have access to, unless the child was specifically listed as a beneficiary by the parent, those funds cannot be safeguarded after their death.
If a deceased parent has an existing mortgage, a child may be able to take on the mortgage themselves, but the bank cannot simply cancel the loan or move to foreclose on the home immediately after their death. Similarly, if your deceased parent owned a home and relied on Medicaid for their health, the government may claim the home as an asset to be used to repay any medical debt after the age of 55, but cannot attempt to retrieve any funds form the children or family of the deceased.
Issues relating to debt and the death of loved ones are complex and can be very emotionally intense. Because of the nature of these issues, as well as the complexities of tax codes, inheritance laws, and even bankruptcy issues, it is critical that you speak with an experienced attorney right away.
Contact an Experienced Attorney Today
If your parent dies, leaving you a broken heart and debt, contact The Law Offices of Patrick L. Cordero today. The team boasts experts in all aspects of fiduciary law, including bankruptcy, foreclosure, inheritance, and retirement. Trust in South Florida’s premier fiduciary and family law attorney – trust in Patrick L. Cordero. Call The Law Offices of Patrick L. Cordero for a free consultation today at (305) 445-4855.