There are a lot of insurance ads out there that mention the burden that a parent's final expenses can put on their adult children.
It is true that funerals, burials and cremation services aren't exactly inexpensive these days. It can cost a lot for a family to pay their final respects to a beloved parent the way that they want. However, a lot of those ads mention a parent's final hospital bills and credit cards as additional expenses that the adult children may have to pay if there isn't enough insurance to cover it all.
For most people, that's an unfounded worry -- but don't expect the debt collectors out there to tell you that. Here is what you should know:
Not everyone dies wealthy.
In fact, about half of the people who die leave very little in the way of claimable assets. Many have mortgages, credit card bills, unpaid property tax and huge medical bills as well.
Spouses may inherit the debt, but adult children do not.
If one of your parents leaves the other struggling with debts, it's time to look into other legal options, like bankruptcy, to protect the remaining parent. However, you need not go that route yourself just because a debt collector insists that you have an obligation to pay your deceased parent's bills.
Debts belonging to the deceased generally transfer to the estate, not the heirs. If the estate can't pay the debt, the bills go unpaid and get written off by the companies.
Bill collectors aren't due money that bypasses the estate.
If you happen to inherit a life insurance policy -- or any other money -- where the benefit was paid to you directly and bypasses the estate, the debt collectors can't come after that money either. If they get wind of it, however, they're sure to make it sound like you have an obligation to pay.
If you have any doubt about what debts have to be paid by the estate, consider talking to an attorney for advice.
Source: Ventura County Star, "Liz Weston: If your parents die broke, you probably don't need to pay their debts," Liz Weston, March 09, 2018