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Don't let creditors convince you to pay a deceased parent's debts

It's probably the last thing you expect following your mother or father's death, but don't be surprised if the creditors start calling.

Also, don't let them convince you that you're responsible for your deceased parent's debts, either. Unless you co-signed a loan or took out joint credit cards with your parent, it's not likely that you owe anything.

The idea that someone can inherit their deceased parent's debts is one of the most common misconceptions that seniors and their adult children often have. It isn't helped by the fact that many insurance companies run ads that imply that a senior's debts can become a burden on their loved ones if they don't have enough insurance.

The reality is that your parent's creditors can only try to claim whatever assets are in your parent's estate -- if there is one. For example, if your parent owns a home with a mortgage that's worth more than the home is valued, the bank is free to foreclose on the home and sell it to try to recoup some of its money.

However, your parent's creditors cannot claim any funds that pass directly from your parent to you. For example, if your parent has a life insurance policy that pays a dividend to you as the beneficiary, you are not obligated to pay your parent's debts out of those funds. You can, however, assign part of the proceeds to a funeral home for your parent's cremation or burial -- at which point, the debt becomes yours (not your parent's).

What does all this mean for you? In essence, it means that you are under no moral or legal obligation to repay your parent's debts. Don't let a fast-talking bill collector try to convince you otherwise. If you're uncertain at all about whether or not an insurance dividend or other asset is yours to take, or what to do about a parent's estate, a probate and estate attorney can help you understand your duties.

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