A friend of mine has an elderly father in poor health, and he recently incurred a large debt for a foolish reason. She is afraid that, if he should die, she will be liable fot this debt. Would the debt holder legally be able to come after her for this money?
No, not in any Western legal system I’ve had anything to do with, and assuming the situation is as simple as you say.
Only his estate is liable for his indebtedness. No-one else has any legal responsibility.
Unless of course he owes it to Da Mob, in which case all bets are off
Let’s hope it’s like a case I heard about from a palliative care counsellor. After her client died the client’s son and daughter discovered that their mother, while riddled with cancer, had run around racking up debts with every financial company imaginable. She had spent most of the money on her children and their children. When they contacted one of the banks to ask about paying off the mother’s loan they received commiserations on her death and were reassured to forget the debt because the loan was insured. They all were.
As others have said, in the US the estate owes the money to the creditors and if there’s not enough to pay the bills, well the creditors are out the difference. Note that does mean the creditors get first shot at the money, ahead of all the would-be heirs So if there is a shortfall, there won’t be any inheritance. legally, creditors can’t go after the heirs for the shortfall.
It’s not uncommon for debt collectors to come after the heirs anyhow. It’s not legal, but it goes on every day. They try to appeal to the conscience of the bereaved: “You don’t want your dear departed Father to go down in history as a deadbeat do you?”
If the deceased had life insurance, that money goes directly to the benficiaries, not through the estate and is not available to the creditors. So they’ll try that tactic too: “You just got $50K in life insurance and we’re owed $30K in final medical bills. How fair is that? You’re effectively stealing that money from us. Pay us and you’ll still have $20K of free money.”, etc., etc., etc.
Report them to the FTC ASAP. There should be a lot more hanging offenses in this country, none of which involve street crime, violence, or drugs.
My mother has been diagnosed with cancer, and it’s not looking good. Right before she was diagnosed, she’d taken a second mortage out on her house. She still owes for the first mortage, and the house really isn’t worth much at all. She’s got a ton of credit card debt, and there’s no way she’s got enough in life insurance to take care of all the debt. I’m pretty sure she’s got her plot and funeral expenses taken care of (or the money to do it), but not much else. There’s no way I can afford to take on her debt in addition to my own.
It’s bad enough she’s dying (or will soon), but to have to worry about all the crap when she’ll be gone is getting to be overwhelming.
Not a lawyer.
Then don’t worry about it. You are not liable for her debts. As has been mentioned, her estate is liable and there might not be any of that left, but that’s all.
I would make sure that she pays the money for funeral expenses now if she hasn’t already done so.
Sorry to hear about your mother - I went through that about a year ago, and it’s no fun for anyone.
But, to reiterate what others here have said: you won’t have to take on her debts. Period. And her life insurance won’t be used to pay off her debts. Whatever life insurance she has will get paid out to whomever the beneficiaries are (like you) - her creditors can’t touch it. You could certainly use some of those funds to pay for funeral expenses.
To figure things out, add up the market value of her house, the market value of whatever stuff she’s got (furniture, car, whatever), and any money she has set aside (checking, savings, CDs, stocks, bonds, etc. - I suspect she has very little in that department). Now, subtract from that the total of all her debts - the outstanding balance on the two mortgages, the credit card debt, any other debts (like a car loan). Whatever is left is what you’ll inherit. If there’s not even enough to cover the debts, the creditors will simply be out of luck. They can’t legally come after you for the difference.
Settling an estate can seem like an overwhelming job, especially since it comes at a time when you’re emotionally really not ready to face it. The clerk of your local court (wherever you have to file the will) can give you information about what you have to do. Don’t think about it all at once - just start chipping away at it, one manageable piece at a time, and you’ll get through it. It doesn’t have to get done quickly, either. It’s not unusual for it to take a year or more to settle an estate.
Well, then, it should be nice to know that you won’t. The estate will have to settle any debts owed, yes, but you yourself won’t be on the hook unless you co-signed the notes.
I hope your financial problems have been solved but stay in touch if times get hard, there is all sorts of information for you here. Approach it however you feel like. Your mother dying is far, far worse than any financial consideration.
Just as a side note, in Italy debts are inherited together with assets. Because of that, someone nominated as a heir by someone has the option to refuse the heredity (not sure if it is the proper term in English, but I hope you get my meaning), possibly after having a survey of the amount of the debts and the value of any assets.
In addition to that, I think I recall that debtors are in any case paid first until there are assets to sell.
I hazard a guess that this disposition might come from Roman Law, and therefore found in some other countries where Roman Law is followed (France, for example), but I have no idea.
I think the question has been answered – the only thing I would add is (while acknowledging **don’t ask’s ** wisdom to focus on the goodbye as more important than any administrative stuff) , if possible try to the extent possible to get all your Mom’s estate ducks in a row before your Mom dies.
Know how much she owes, to whom and what the contacts numbers are, learn where the important documents are. It is yucky, not fun and ugly now. But it will need to be done when you are (probably) in the wake of one of the top 5 lowest points in your life and at your Mom is around to help now.
Unless you have cosigned some sort of loan, you are not liable for your mom’s debts. The estate will be liable. In the event that the estate is insolvent, what usually happens is that a hearing is held and the creditors have to file their claims with either the court or as in in VA, the Commissioner of Accounts, a hearing is then heard on the validity of the claims, and he will determine the priority of the debts and who gets paid first, and on what basis. Mind you, each state’s laws are a bit different.
You won’t get anything from her estate, but you won’t be liable for her debts either.
It will be a good idea to familiarize yourself with where the important papes such as her will, advanced medical directive and power of attorney (if any) are located.
But if you want the house…
However, it is a good idea to get “those ducks in a row” as jimmmy and brujo has siad.
Make sure she has a valid will.
Get a lot of her assets “in trust for” you. That way, you won’t have to worry until probate isettled to get your hands on them. This is important as there will be costs - like funeral costs- and you will need the money then. For example, a certificate of deposit held in trust for you can be “cashed in” as simply as showing the death certificate. A “living trust” is something to look into.
There is very likely a free legal advice “lawyers referral service” or something of the like (or more than one) in your town. The Bar association, maybe some Senior org or dept, etc. See them
I’m not entirely sure a Trust is the way to go here. The mortgages are already recorded against the house, so moving the house into the Trust doesn’t solve anything.
With regards to the money, it might be better to make it a joint account, that way if mom dies, the money goes to you automatically, (from what I recall). Hell, it might be best if mom makes you a “gift” of the money so that you can pay for the funeral and the accompanying expenses.
I forgot to mention that laws vary from jurisdiction so what may work in my jurisdiction may not work in yours. It is best to consult an estate planning attorney to figure out these matters ahead of time.
Also be aware that scam artists read obituaries…
I received a phone call a few days after my father died from someone claiming to be from the hospital billing office who said there had been a problem with my father’s file and would I please give him my father’s SSI number, VA number, DOB, etc. “to verify the records.” I told him I would be happy to give him that information as soon as he gave me his full name, his supervisor’s name and after I had called the hospital myself to verify his story. Click.
Sorry, didn’t make myself clear- it might not help with the house- except that if you do want it, and can pay the mortgage, it will make putting it in your own name much easier.
“In trust for” seemed to work better than Joint, in my experience, but IANAL, YMMV.