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Are you going to inherit your parents’ credit card debt?

On Behalf of | Jun 20, 2024 | Probate & Estate Administration |

Credit card debt is very common in the United States, and it keeps growing. For example, it recently passed the $1 trillion mark, setting a new high point. But it is likely that it will only continue to climb from there, as Americans use credit cards for numerous purchases.

You may find yourself a bit concerned with your parents’ spending habits, especially in light of that staggering debt. You know that you are going to inherit your parents’ assets when they pass away. But are you also going to inherit their debts? Are you suddenly going to be responsible for their credit card debt, which could be unaffordable for you – especially if they pass away unexpectedly?

The estate covers outstanding debts

No, unless you are a co-owner on the credit card account, you are not going to inherit that debt. Instead, your parents’ own estate should pay it off. This is one of the jobs that the estate executor does as they handle the assets after someone’s passing.

This could mean that you receive less than you expected. For instance, say that your parents have $100,000 in savings that they were going to leave to you. But they also have $50,000 in credit card debt. The executor would likely need to pay the $50,000 off first, meaning that you would “lose” half of your inheritance. But if the estate didn’t have enough funds to pay the debt entirely, you would not “inherit” the remaining balance. 

The financial side of estate planning and estate administration can become complex, so be sure you understand all of your legal options.