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| Are children responsible for parents’ debt? |
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Last Updated
13th of April, 2010
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No, children are not responsible for their parents’ debt. There is only one exception: If the children co-signed on a loan with their parents, the surviving co-signer would still be responsible for paying back the debt (any co-signer, a child or otherwise, is always responsible for unpaid debt, which is why you should always be careful when co-signing on any loan).
When the parents die, their estate would be responsible for the debt, and any assets they possess could be seized to cover the outstanding debt. The lawyer in charge of the estate or a Power of Attorney would be responsible for overseeing the process of settling the debt from the estate proceeds, but no child or relative is personally responsible.
If the parents have no assets to cover the debt, the lenders would likely be forced to write off the debt and take a loss. Any estate assets seized to pay the debts would come out of any inheritance that was left. Therefore, assets that will be inherited upon the death of a parent or relative would first go towards paying off any outstanding debts.
Additionally, if the parents have made any sort of gift to the children in the last years of their life, the children may be required to return that gift to satisfy the unpaid debt. This depends on the state; consult an attorney that belongs to your state bar association to get specific information regarding your case.
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