Can I inherit my loved one’s debt?

Steps to take if creditors wrongfully come after you

• Request that they stop contacting you via certified letter.

• Report the creditor to your state attorney general's office.

• File a complaint with the Federal Trade Commission.

• Understand that you are likely not obligated to fulfill your loved one’s financial commitments unless:

  • You co-signed a loan.

  • You are a surviving spouse in a community property state.

  • You jointly owned property with them.

  • You are an adult child who must pay their medical debts.

The weeks and months after you lose a loved one can feel overwhelming. Grief is a heavy burden that can make every task seem monumental, and every new piece of information stressful. If you discover that you are set to inherit some of the person’s estate, gratitude to your loved one may coexist with concerns about what, if any, financial responsibilities you might have as a result. Fortunately, there are clear systems in place that will almost always absolve you of any financial commitments your loved one made.

Even with careful planning, most of us leave behind a car payment, credit card balances, medical expenses, or a mortgage. Plus, if your loved one received Medicaid benefits after age 55, states are usually required to try to recoup certain expenses from the estate. 

To solve this problem of leftover debt, there’s a well-defined probate process for resolving debt before anything is distributed to beneficiaries. Unless you’re the executor, administrator, or trustee, generally speaking you will not need to be involved in that process, nor will you need to pay your loved one’s creditors. And if you’re a beneficiary of a life insurance policy or retirement account, rest assured that money will normally come to you directly, rather than passing through the estate or the probate process. 

Probate courts ensure that debts are paid—but only when the assets in the estate are sufficient to cover them. When the estate cannot cover the debts, some creditors will not get paid. In general, neither you nor any of your loved one’s other relatives will owe them that money from your own personal funds.

Nevertheless, creditors may try to extract payment from surviving relatives. If this happens to you, be aware that they are only legally allowed to contact you once, and only to ask you who is managing the estate. Unfortunately, this may not stop them from hounding you to demand payment, dishonestly claiming that you’re liable. This can be a difficult and frustrating situation, but know that they are the ones in the wrong here. If this happens, you can take action: First, request that they stop contacting you via certified letter, and then report the creditor to your state attorney general's office and file a complaint with the Federal Trade Commission.

Exceptions to the rule

It’s important to be aware that there are a few situations where you could find yourself obligated to fulfill financial commitments your loved one made. It’s a good idea to consult a lawyer if you find yourself in one of the situations below. And keep in mind: You ultimately will not be required to pay if you can prove that you can’t afford to.

Co-signed loans

If you co-signed a loan—like a line of credit, a mortgage, or a car loan—you have legally agreed to repay it, even if you didn’t use the line of credit and only your loved one did. You will share responsibility for the debt with your loved one's estate. However, if you were simply an authorized user on a credit card, rather than a cardholder, you’re not responsible for paying the balance.

Community property states

In several states, known as community property states, any loan agreement made by a spouse with a creditor during the marriage becomes the responsibility of the surviving spouse (this includes some student loans). If this applies in your state, the rule unfortunately holds whether or not you were aware of or agreed to the debt. However, if you let creditors know during the probate process that there’s little to no money in the estate to cover these debts, you have some chance of having these debts reduced or forgiven.

Jointly-owned property

During probate, some states will require the executor or administrator of the estate to pay a bill by selling property that was jointly owned with a surviving spouse.

Filial responsibility statutes

More than half of all states have laws that require adult children to care for their elderly parents. In certain cases, other adult surviving relatives may be obligated as well. If this applies in your state, you could be held responsible for nursing home and medical expenses that are still unpaid at your parent’s passing. These laws are very rarely enforced, but it’s possible that this could change as health care costs continue to rise and more Baby Boomers age into elder care facilities.

When you’re caught off guard

It can be devastating to have anticipated an inheritance that is diminished or eliminated after your loved one’s debts are settled. This is especially true when it means that cherished assets must be sold off or given away to cover the debts. Your loved one’s possessions may feel sacred and untouchable. The watch you wanted to pass down to your own child. The small nest egg you saw your mom squirrel away for you to inherit. These things feel like so much more than just assets. But, when your loved one passed away, these all became part of their estate, and may, at the end of the day, have to be sold to meet the estate’s needs.

No matter how small or nonexistent your inheritance might be after the dust has settled, keep in mind that the intent of your loved one’s gift is still intact. The love you shared can’t be minimized, and the memories evoked by an heirloom live on, whether or not the heirloom remains. Let your loved one’s kind gesture bring you comfort as, over time, you move through—and beyond—the hardest stages of your grief.

You may be eligible for free bereavement support. Empathy can help with everything from funeral planning to estate administration, with step-by-step guidance and real-time expert support. Many people get free premium access to Empathy as a benefit with their life insurance claim. We partner with New York Life, Guardian Life Insurance Company, Bestow, Lemonade, and other leading carriers. When you make your life insurance claim, talk to your representative about whether Empathy is a benefit they offer.