If your parent dies when they have no money or assets left, you may find yourself in a difficult position. If you’re in charge of managing the estate, you may begin receiving letters from creditors or calls from those trying to collect debts.
One of the issues with a parent who dies with debt and no assets to repay it is that the creditors may try to make you feel like you’re responsible for those debts. The thing to remember is that you, as a family member, usually cannot be forced to repay those debts out of your own pocket.
Debts don’t disappear when someone dies, but the way they’re handled will vary. If the estate doesn’t have enough assets to pay the bills, those bills may simply not get paid. If your parent’s spouse is still alive, they may have some responsibility for some debts, but children and other relatives rarely do unless they’ve co-signed on the debts themselves.
Will you lose assets that passed directly to you?
The nice thing about having certain assets paid directly to you is that you likely will not need to use those assets to repay creditors coming after the estate. For example, if your parent died without anything in the bank but had a life insurance policy that paid directly to you as the beneficiary, then the likelihood is that the money you’ve received won’t be accessible by creditors. Instead, you can keep that to handle anything that needs to be paid, like the funeral costs or your own personal bills, rather than paying down debts that don’t have anything to do with you, personally.
How should you address it when creditors call?
When a debt is left after an estate is out of funds, the debt normally goes unpaid. You will need to let the creditor know that your loved one has died. Usually, this includes submitting the death certificate and informing the creditor that your family member has died. If they continue to press for compensation despite you not owning on the debt, you may want to look into your legal options.