Do children inherit their parents’ debt?

On Behalf of | Jan 22, 2024 | Estate Planning |

Adult children certainly can inherit their parents’ assets. For instance, if your parents have made an estate plan, they may have left you and your siblings financial assets or tangible assets – like a small business or a family home. These things pass from one generation down to the next.

But your parents likely have debt to go along with their assets. Do adult children also inherit this debt and have to pay it off?

Debts are handled by the estate executor

To start with, no, children who have not cosigned on loans or lines of credit will not inherit debt that they didn’t expect. Just because your parents still owed the credit card company $5,000 doesn’t mean that you suddenly owe that same company $5,000.

But that doesn’t mean that the debt just disappears. Instead, the estate executor has to handle it. They make an inventory of all the assets that the estate owns, and then they can use those assets to pay off remaining debts. Once they are done, they can pass any remaining assets on to the beneficiaries that have been named in the estate plan.

So, if your parents passed away with a substantial amount of debt and no plan to take care of it, the estate executor may have to spend a large portion of what you considered “your” inheritance paying off the debts. You may feel that you didn’t receive as much as you expected. But there isn’t a scenario where you would suddenly be in debt and obligated to pay off loans that your parents took out independently.

The financial side of distributing an estate can be very complicated. While going through this process, those involved need to be aware of their legal options.


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