PLEASE NOTE: our office remains open and available to serve you during the COVID-19 crisis. However, to keep our staff and you healthy, we do ask that business be conducted over the phone or via email if possible. We can also accommodate video conferencing as well and at this time we are offering our clients the ability to meet with us in person if necessary. We also now have online bill pay for your convenience. Please call our office to discuss your options.

Prompt, Aggressive Representation

Serving Harnett County Since 1969

What happens if my parents died broke?

| Aug 4, 2020 | Estate Administration |

Instead of fighting with siblings over an estate matter, many baby boomers are now facing a totally different estate administration conundrum — sorting out the mess when their parents died outright broke or heavily indebted. This scenario plays out far more often than one would suspect. In fact, in 2012, the National Bureau of Economic Research conducted a study that determined almost 50% of senior citizens pass away with less than $10,000 in assets.

At the same time, the debts for senior citizens are on the rise. In past generations, it was unusual to find senior citizens still owing mortgages. But this is becoming far more commonplace.

The first thing you need to know as the adult child of an in-debt deceased parent is that it is very likely you have no legal responsibility to repay your parent’s debts. The exception to this might be if you shared a credit card account or co-signed for them for a loan or line of credit.

Certain assets that your parent had may also pass directly to you and other heirs without needing to go through probate. These include:

  • Life insurance policies
  • Bank accounts that are payable on death
  • Retirement benefits
  • Accounts with named beneficiaries that don’t include the decedent’s estate

If you are the administrator of an in-debt parent’s estate, you need to be very careful in how you manage and disburse any assets. You could face very unpleasant legal and tax consequences by liquidating assets that were owned by a debtor. In those cases, it is usually advisable to seek the counsel of a North Carolina estate and probate law attorney to avoid running afoul of any state or federal laws.

Archives

FindLaw Network