who is responsible for decedent debts?

[Jillym]

My mother is ill and will pass in the near future. I'm in my early 20's and confused about what to do for the future. She does not hold many assets and does not own house. However, she has a high amount of debt which includes school loans, credits cards and a car loan. Am I, as her sole beneficiary, responsible for paying her debt? I do know that the life insurance she holds will not cover the debts - do I have to pay all of the insurance money to creditors or can I keep any of it for my own future monetary needs?

 

[ALawyer]

I am sorry, as I camn appreciate how hard this all is for you.

The good news is that people do not die sutomatically leaving debts to their kids, or lots of people would live it up big and think, as a ruler of France once said, "apres moi, le deluge" -- after me the deluge (of debt).

I really can not answer you about her insurance. In most cases the face amount would go to you if you are the named beneficiary and you would not have any obligation to use the funds to pay off her debts. But, like many things, it sometimes depends.

Of course to the extent you have signed for her, or guaranteed her debts, you would be liable. Similarly, to the extent you took assets from her esate that could have been sold and used to pay creditors, you would be liable.

 

[advisor10]

2-4-2002

DEAR JILLYM:

You will NOT be held responsible for your mother's debts. The life insurance is not required to be reported as a probate asset and you can spend that money any way you wish--but it would be nice if you wanted to pay some of your mother's obligations.

If there is not enough money in the estate to pay outstanding bills, they unfortunately will have to go unpaid and will be written off as bad debts later on.