Will you be responsible for your aging parents’ debts someday? We explore how a deceased person’s debts are handled and when a surviving child could be responsible for repayment.

Gary,
I’ve heard that when parents are in debt, and they die, the debts are left to the children to pay off. Is this true?

My parents had gotten a divorce a few years ago. My mom is doing well because she is a saving queen. My dad had remarried two years ago. His wife does not work but loves to spend money. So now they have $20,000 in debt. If my father dies, his wife is responsible for the debt, right? What happens after she dies and there is still that debt? Also, what happens if she dies first and then my father – who gets the debt?
Judy

How Debts Are Handled Upon Death

Judy asks a question that comes up often. Can someone die and ‘leave’ their debts to you? The answer is no. Parents can’t leave their debts to you. In fact, they can’t even leave their debts to their spouse.

Typically, a will controls financial affairs after a person’s death. A will distributes assets, not debts. But, before any money can be distributed to heirs, all the debts must be paid. So, enough assets are sold to pay for any debts that remain. Only after the debts are paid will the remaining assets be distributed among the will’s beneficiaries.

Related: What You Need To Know About Writing a Will That Will Protect Your Heirs

Circumstances When a Surviving Spouse or Child Could Be Responsible for a Debt

The key point to remember is that you are only responsible for debts that you contractually created. Certain circumstances would put Judy at risk for her dad’s debt. But she would have had to do something to cause that responsibility.

Co-Signed Loans

Suppose that Judy’s dad asked her to co-sign a loan. Signing would make her responsible for the debt. Not only if Dad died but also if he failed to make a payment. But she shouldn’t be surprised. When you ‘co-sign’ a loan, you do just that. You put your signature on the loan application.

Joint Credit Cards

A similar situation occurs with a joint credit card. A joint account allows anyone named on the account to use it to create a debt. But it also means that everyone listed on the account is responsible for the entire debt created.

Suppose Judy had a joint card with her dad. And he was the only one using the card. Any debts he left at death would be Judy’s. But once again, it should be no surprise to Judy. She signed the joint application for the account. And it’s her responsibility to be aware of whether it’s being paid off or not.

It wouldn’t be unusual for Judy’s dad and stepmother to have a joint account. In that case, the survivor would be responsible for any balances on the account.

Joint credit card accounts often create problems in a divorce. Often, a couple has a joint account before the divorce. The credit card company isn’t going to split the bill just because a couple throws in the towel. As far as they’re concerned, both the ex-husband and wife are responsible for the entire bill amount until it’s paid. And while a court can instruct one party to pay, sometimes it still doesn’t happen.

Another way people end up paying someone else’s debt is when you let someone use your credit card. Again, it should be no surprise when the bill comes in.

Community Property

If you’re married, you might be liable for a debt even if you’re not listed on the account. That’s the case in ‘community property’ states.

So What Happens to the Debts of Someone Who Dies?

The credit card company will first try to collect from the estate. As mentioned earlier, assets will be sold to pay the bills. Then, if the account was a joint account, any survivors will be left holding the bag. If the debt belonged solely to the deceased, then the credit card company will end up eating the debt if there aren’t enough assets to cover it.

But Judy isn’t completely off the hook. She might still want to advise her dad to control his spending. As her father and stepmother get older, they could have trouble keeping up with the minimum payments. And, once they fall behind, things will get tough. Credit card companies are quick to bump up interest rates when you miss a payment.

And that would be trouble. Judy’s father will probably be living on a fixed income during retirement. So, the payment that was a struggle at 14% interest becomes impossible when the interest rate goes to 20+%. And unless they have some assets that can be sold to reduce the debt, the minimum payments will dominate their finances.

And that’s where Judy comes in. I don’t know her relationship with her father, but watching a parent struggle to put food on the table would be awfully hard. Even if they caused the problem by foolish past spending.

It actually would be interesting if parents could ‘leave’ their debts to someone after they die. At least not at this time. Although, there are some moves that would make that the law.

If that were ever to pass, I suspect that many children would treat their parents much better. Instead of parents threatening to cut a child out of their will, parents could run up large debts and threaten to put a child into their will! Never mind! It’s a good thing that the law doesn’t read that way. Somehow I don’t think that it would be good for family relations.

• Will I Inherit My Spouse’s Debts?
• What Happens to My Debts When I Die?
• Can I Inherit My Deceased Parents’ Debts?

Reviewed October 2023

About the Author

Gary Foreman is the former owner and editor of the After50Finances.com website and newsletter. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com.