Some Arizonans are fortunate enough to inherit homes, significant retirement accounts and valuable jewelry and antiques when their parents die. However, many people’s parents are able to leave them virtually nothing of any monetary value. In fact, they may die in debt.
People are living well into their senior years — sometimes longer than they expected and saved for. Medical costs and assisted living facilities can eat up a senior’s savings. Those who are able to remain in their homes are more likely to still be paying off their mortgage than previous senior generations. Many people end up with significant credit card debt.
If your last living parent has unpaid bills and other debt when he or she dies, the debt falls to the estate. If the estate isn’t worth enough to cover what is owed, it’s important to handle the situation correctly to avoid legal issues.
If the estate isn’t worth enough to cover the debts, you likely won’t be responsible for them — even if some creditors and collection agencies try to convince you otherwise. If a parent has put you on an account or life insurance policy as a beneficiary, you have no obligation to use that money to pay a parent’s debt. If the estate is listed as the beneficiary, though, it’s a different matter.
If your parent didn’t have an estate planning attorney, it’s wise to consult one. He or she can help you write letters to creditors and take care of other responsibilities involved in closing out the estate according to the laws of Arizona or the applicable state.
Source: The Washington Post, “When your parents die broke,” Liz Weston, AP, March 05, 2018