Awkward question: Debt inheritance

You have no obligation to pay off your parents debt when they die.

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From the Summer 2012 issue of the magazine.

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Final notice billQ: My parents have a lot of credit card debt and they owe money for various other bills. Am I responsible for paying these when they die?

—A.N., CALGARY

A: Relax. There’s a greater chance you’ll inherit your mom’s shoe obsession or your dad’s fixation with curling than their debt. You have no obligation to pay your folks’ bills post-mortem, although if you’ve co-signed any loans or own property with them, you could be on the hook if there’s not enough money in the estate to cover their debt, says Sandra Foster, financial planner and author of You Can’t Take it With You. Also keep in mind that if your parents name you the executor of their estate, you’ll have an obligation to make sure all debt is paid off before any proceeds are paid to beneficiaries. “If your parents aren’t comfortable saying how much debt they have, encourage them to leave their records in order,” says Foster.

Got an awkward money-related question? Email it to: ask@moneysense.ca

2 comments on “Awkward question: Debt inheritance

  1. Great question. It's good to know that one cannot be made responsible for another's debt unless they cosigned on it. Being an executor to someone's estate seems like a lot of responsibility, so it's important to choose someone who wants to do it and is good with finances.

    Reply

  2. If your relative has left debts you should expect to receive calls from collection agencies trying to get you to pay these debts. There is no bligation on The executor or relatives or friends to pay these debts but they often do because collection agents pressure them into it.

    Reply

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