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Do children need to pay a deceased parent's debt?

You have $10,000 in credit card debt. If you pass away, does that debt simply go to your children? Are they obligated to pay?

This is an important question to ask when doing your estate planning. The truth is that, in most cases, children do not need to pay for debts like this and have no obligation to even attempt it. After all, just because a parent was approved for a card with a high limit does not mean that the children can afford it or had any say in the parent's spending. It would be unfair to pass the debt to them.

There is one exception, which is if parents and children are on the same account as joint cardholders. In these cases, since both have agreed to pay, the children may be responsible.

So, who has to pay? Generally speaking, all outstanding debt has to be paid out of the parent's estate when they pass away. Say your home is worth $300,000, for example. Your children sell the house and plan to divide the money. Before they do, your estate may need to use $10,000 of that money to pay off your debt. In this way, children may feel like they are paying, as they would have received the money otherwise, but the truth is that it is just coming out of the estate before the assets go to them.

As you do your estate planning, look carefully at all of your debts, liabilities, assets and accounts. Make sure you carefully consider how to create the right estate plan for your family and how to make things easier for your heirs.

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Law Office of Suzanne P. Nicholl, PC
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