Do You Inherit a Parent's Debt When They Die?

Your parent’s debts get paid out of what your parent owned, which the law calls the estate. If the estate runs out before the bills do, most of what’s left goes unpaid, and you don’t take it over as their child.

You can still owe in a few narrow cases: if you signed for the debt, shared the account, are a surviving spouse in certain states, or are the executor and pay things out in the wrong order.

Who pays the debts after someone dies?

The estate pays them, through an executor named in the will or an administrator the court appoints when there’s no will. That person collects the bank balances, the car, the house and anything else in your parent’s name, then pays valid claims before any heir, including you, gets a dollar.

State law sets the order. Arizona’s probate code, section 14-3805, puts the cost of running the estate first and leaves credit cards, personal loans and old medical bills for the very end.

Claims in the same class share equally, so if the money runs out partway through class 6, no card issuer in it gets paid ahead of another.

Creditors also face a clock. In Arizona they have four months from the first published notice to the estate to file a claim, and a late claim is barred for good.

If you’re the executor, federal Regulation Z helps you with the credit cards. Once you ask, a card issuer has to give you the balance, and the rule treats 30 days as timely. From your request on, it can’t add fees or raise the rate. If you pay in full within 30 days of getting the figure, it has to waive the extra interest.

Do I have to pay with my own money?

Generally not, because a collector’s claim is against the estate, and the estate pays only if it has the money.

The Federal Trade Commission spelled out the rules in a policy statement published July 27, 2011. Collectors may discuss a dead person’s debts with a spouse, the executor or administrator, or anyone else with authority to pay from the estate. To avoid misleading you, the FTC said, a collector may need to say clearly that it wants payment from the estate’s assets and that you can’t be required to pay from your own.

Ink and halftone illustration of a brick row house in late-afternoon light. An Indian man in his 60s with white hair, glasses, a quilted navy vest and a grey shirt stands in the open front doorway holding a torn-open envelope in one hand and a blank folded letter in the other. A stack of envelopes sits on a hall table behind him, and a small brown bird perches on the iron stoop railing by a potted plant. — *Under the federal debt collection law, a collector that contacts you has to send its name, the amount owed and your right to dispute it within five days.*

Keep every letter and pass it to the executor, who checks it against the estate’s records and decides whether the claim is valid.

If you aren’t the executor and the calls keep coming, you can tell the collector in writing to stop contacting you. The FTC suggests sending that by certified mail. After that, a collector may contact you only to confirm it will stop or to say it’s taking a specific legal step.

When would a family member actually owe?

You owe when your own name or your own legal duty is attached to the debt, and the Consumer Financial Protection Bureau and the FTC name a short set of cases between them.

Situation	Why you owe
Co-signer on a loan	You promised to repay it when you signed
Joint account holder	The account is legally yours as well
Spouse in a community property state	State law can put shared property toward the debt
Spouse in a state with a necessaries law	Some states make spouses pay for essentials such as health care
Executor who skips probate rules	Paying heirs before creditors can leave you answering for it

Being an authorized user on your parent’s card is a different thing from being a joint holder, and the CFPB treats the two separately. An authorized user never signed for the balance, while a joint holder did.

What changes in a community property state?

Nine states treat most of what a married couple earns or buys during the marriage as owned by both: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Alaska lets couples opt in with a signed agreement. In those states, the CFPB says, a surviving spouse may have to use jointly held property to pay the other spouse’s debts.

That rule reaches the surviving spouse, and it doesn’t reach you as a grown child, wherever you live.

What happens to student loans?

Federal student loans are canceled when the borrower dies. The Education Department rule at 34 CFR 685.212 discharges the debt once the servicer gets acceptable proof of death, such as a death certificate. A parent PLUS loan is also discharged if the student it paid for dies.

Private loans used to leave co-signers on the hook. The Economic Growth, Regulatory Relief, and Consumer Protection Act, signed May 24, 2018, now makes a private lender release any co-signer once it learns the student borrower has died, but only for loans made on or after November 20, 2018. If you co-signed an older private loan, the promissory note decides what happens, so find it before you send a payment.

Can Medicaid claim the house?

Medicaid can file a claim against it. Since the Omnibus Budget Reconciliation Act of 1993, every state has had to seek repayment from the estates of enrollees who were 55 or older, for nursing home care, home and community-based services, and related hospital and drug costs. For many families the house is the biggest thing in the estate, which is why the claim lands there.

Medicaid.gov spells out the limits. A state can’t recover while the enrollee leaves a surviving spouse, a child under 21, or a blind or disabled child of any age. Every state must also offer a hardship waiver.

An HHS policy brief counted $330 million in estate recoveries nationwide in 2003, about 0.13 percent of Medicaid spending and far below what early estimates had predicted.

Can a nursing home bill land on the children?

In some states it can, under filial responsibility laws that make you answer for a parent’s basic care when the parent can’t pay. ABC News counted 29 states with such laws in 2012. The number has dropped since then, and Iowa repealed its law in 2015.

Pennsylvania supplies the clearest example. In May 2012 the state’s Superior Court sided with a nursing home that sued John Pittas for $92,943.41 of his mother’s care, while her Medicaid application was still unsettled. The nursing home sued the son before Medicaid had even decided on his mother’s application. That gap is the strongest case for filing a parent’s Medicaid application early and following it through to a decision.

These laws cover a parent’s care and support, but they don’t turn your parent’s credit cards or car loan into your debt.

Where to start this week

Order several certified copies of the death certificate. Federal loan servicers, card issuers and the probate court will each want one.
Find out who the executor or administrator is, and send that person every bill and collection letter. Nothing requires you to pay those bills from your own account unless one of the exceptions above applies to you.
Call a probate attorney if there’s a house, a business, or more debt than money. The CFPB points people to free legal aid, local bar association referral services and the Eldercare Locator, and none of this article is legal advice for your estate.