Hopefully your parents enjoyed a happy life, filled with all the joy and good times envisioned on their wedding day. At the end of their lives, you may be facing questions about your parents’ choices–including debts. Am I responsible for my parents’ debt when they die? The quick answer to that question is…..no.
Unless you co-sign for someone else’s debt, you are generally NOT responsible for their debt. Think student loans. If you, as a parent, co-sign on debt for your child, you are responsible if your child fails to pay the debt. Same thing for houses and cars.
Whether your parents have a Will or not, if they die with debt in THEIR names, there is a legal process that should be followed.
First, if your parent died with assets that are not in a trust, depending on their assets and the amount, a you probably need to go to probate court for the administration process. If you have a Will, you get Letters testamentary. If you don’t have a Will, the Court must determine who your heirs are and appoint someone to administer your Estate. After Letters are issued or an administration is opened, then your attorney should publish notice to creditors in the county where the person passed away. If unsecured creditors exist, they must file a claim with the Estate in the Probate Court.
Whoever is the administrator of the estate is responsible for making all payments to creditors with valid claims. The payments are made from the assets in the estate. These amounts are usually negotiable and you absolutely should negotiate large bills. If there are more debts than assets, creditors will only get a pro-rata payment depending on what class of creditor they fall into per the Texas Estate Code. Neither the estate, nor the administrator personally, will ever be responsible for coming up with the difference.
If you have any questions regarding completing an estate plan for yourself or an aging parent, or if you are the administrator of an estate, call our office at 817.638.9016 with all of your questions.