Are You Responsible for Your Parents’ Debt in Tennessee?

After the passing of loved ones, especially one’s parents, it can be challenging to process all of the legal requirements that are necessary to fulfill when faced with such a deep loss. An estate planning lawyer at Emmack Probate and Estate Law Group can help parse through some of these questions and inquiries that you may find yourself asking, such as, “Are you responsible for your parents’ debt in Tennessee?”

How Debt Is Handled After Death

If your parents passed away and they still had remaining debts, it is common to want to understand what happens to those financial obligations and whether they ultimately fall on you. The legal process and requirements that follow an individual’s death are quite complex and can be overwhelming to understand.

It is important to note that you likely are not responsible for your parents’ debts unless you have a specific legal obligation due to one of the following reasons:

• Cosigned Loans: In the event that you cosigned a loan or credit card with your parents and they incurred debt, you may be legally responsible for repaying it after their death. This is because you knowingly took on the liability of that loan or credit card.
• Joint Account Holders: If you share a joint bank account or credit card with a parent, you may be responsible for the debt that is associated with that account.
• Community Property States: Tennessee is not a community property state, so you are not liable for debts your parents incurred unless you specifically agreed to them.
• Fraudulent Transfers: In the event that assets were transferred from your parents’ estate to avoid paying creditors and debts, they may be reversed, and the creditors may pursue those assets. This does not make you responsible for the debt but could affect any inheritance you may receive.

While there are specific examples of when you may be responsible for your parents’ debts, in general, their debt will not greatly impact your current financial standing. You are not responsible for your parents’ debts in the following situations:

• Debts Belong to the Estate: If your parents have debts that are not connected to you, their estate’s assets are used to pay off all debts. If the estate’s assets are not large enough to cover the debts, the estate is then called “insolvent,” and the remaining debts are written off. Creditors cannot seek payment from other family members.
• Unsecured Debt: In general, creditors are required to write off unsecured debts if the estate does not have enough assets. These debts include credit card debt, medical bills, and personal loans.

There are, of course, certain key assets that bypass the estate and are not subject to creditor claims, including the following:

• Life Insurance Proceeds
• Retirement Accounts
• Trust Assets

It is important to ensure that creditors are informed of your parents’ passing and that you provide them with a death certificate. By working with an executor in Tennessee, paying off debts can be handled in the proper legal manner. If you receive pressure from creditors to resolve your parents’ debts, you can work with a probate attorney to address the situation.

FAQs

What Do I Do With My Parents’ Debt After They Pass?

In general, you are not personally liable for your parents’ debts after they pass unless you cosigned or shared accounts with them. While these debts may not fall on you, there are key steps to take to help manage the situation. It is helpful to notify creditors of your parents’ passing and provide a death certificate. In Tennessee, it may be advisable to determine the total value of assets in your parents’ estate to understand the financial situation and ensure proper handling of the estate.

What Happens to Your Debt After You Pass Away?

After you pass away, your debt does not just disappear on its own, instead it is accounted for during the estate settlement process. An individual’s debts are paid from their estate, which is the total asset package that they leave behind, including bank accounts, personal property, and real estate. If an individual has an executor or administrator, they will manage the estate and ensure all debts are paid off.

Can a Lawyer Help You With Your Parents’ Debt?

Yes, a lawyer can offer great support and help as you navigate the complexities of managing your parents’ debt after they pass away. A lawyer can help you understand your legal responsibilities and explain which debts may be discharged and which must be paid from the estate. A lawyer can help with many aspects of navigating your case, including providing support through the often complex probate process.

Can I Still Receive an Inheritance if My Parents Had Debts?

Yes, you can still receive an inheritance if your parents passed away with debt, depending on the estate’s financial situation. The amount of inheritance you may receive will depend on how much debt your parents had and how much of the estate is used to pay it. Debts are paid before any assets are distributed. The remaining assets, after all debts are paid, are distributed to their heirs and beneficiaries. Protected assets, like life insurance payouts, can be given regardless of debt.

How Much Is an Estate Planning Lawyer?

The cost of an estate planning lawyer varies depending on several key factors, including how complex your case is, the specific services that you are seeking, the lawyer’s experience level, the specific jurisdiction, and the lawyer’s fee structure. It is important to have a detailed conversation with your lawyer about the financial expectations of your partnership to ensure you are fully aware of your financial responsibilities.

Contact Our Lawyers to Get Help with Debt

Navigating the aftermath of any loved one’s passing is challenging, especially when it is your family. If you have questions or concerns about how to handle your parents’ estate and debt after their passing, meet with a trusted estate lawyer. Set up an initial consultation with Emmack Probate and Estate Law Group today, and learn how our legal team can support you through this challenging time.