What to do When You Inherit Your Parent’s Debt

Losing a parent is always a stressful experience. The loss of someone you love is devastating and emotions run high. That is why inheriting a parent’s debt can be even more stressful. Most people do not know what laws apply to the situation or what they should do to discharge the debts they still owe. There are a few important guidelines to help you more easily determine what to do when you inherit a parent’s debt.

Medical Debt

Medical debt of a parent sometimes must be paid by the estate or by children, and other times, it is not required. The main determination for medical debt is whether or not your parent was on Medicaid.

If your parent was on Medicaid, you will never be directly responsible for the debt. Under Medicaid regulations, the only major asset that a person can possess and still qualify for Medicaid is a home. That home can be placed under a lien in order to recover medical debt, but the money taken from the estate will be limited to the value of the home.

If your parent was not on Medicaid, different rules apply. First, medical bills will be paid out of the assets in the estate. If there is not enough money in the estate, children are required to pay the remainder in some states.  Each state has laws that determine if children inherit the medical debt of a parent under so-called “filial laws.” Thirty states currently have laws that require children to assume medical debts to some extent. New York is not currently a state with such laws, but the amount owed is determined by the state where the medical debt was incurred.

Other Debts

You also may be responsible for other debts left behind by a parent. If you inherit a parent’s home, you will be responsible for paying any mortgage associated with the home, or you can make the decision to sell the house and use the profit to pay off the mortgage. If the value of the mortgage is more than the value of the house, the bank can go after the estate for the difference.

You will not be responsible for paying most other debts left behind by a parent, such as taxes or credit cards. These debts can be taken out of the estate. Government agencies have high priority, so taxes will often be paid off first. Credit cards have very low priority, and sometimes credit card debt can be negotiated, because creditors do not want to risk getting nothing.

Contact Us

While these guidelines can help you determine what debts you may inherit from a parent, the process to settle an estate and associated debts can often be drawn out and complicated if you are not experienced in the field. It can help to have an experienced estate attorney settle these complications for you to avoid paying any debts you are not required to settle. Andrew Lamkin has years of experience settling estates for clients in the most beneficial way possible. You can contact the Law Office of Andrew M. Lamkin by calling 516-615-0625 at any time for a free consultation.

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