When your parents pass away, you may go through their estate to see what assets they have and what debts they have remaining. Adult children are often very curious about their parents’ financial position. This goes doubly for the person who has been named as the estate administrator — because it’s their responsibility to handle these assets and debts.
For instance, maybe your parents still owed income tax for the year or still had outstanding credit card bills. If you’ve been named as the administrator, you are the one who has to contact these companies. You may have to provide a death certificate in order to get access to the accounts. You can then pay off the remaining balance and close down the accounts so that there isn’t an issue in the future.
You do not have to use your own money
One of the big concerns that people have about being an estate administrator is that they will suddenly be responsible for their parents’ debts. After all, they know that assets are going to transfer to the next generation in accordance with the will. But it feels very unfair for debts to transfer to them, especially if their parents were fairly well off and may have had more debt than their adult children can even afford.
But the good news is that you do not ever have to use your own money to pay off these debts unless you were a co-signer. But in the vast majority of scenarios like this, children have nothing to do with the debt that their parents took out, and it does not transfer down to the next generation.
As long as there is money in the estate, you can use these funds to pay off the debt. The only financial downside for you and other beneficiaries is if there are more debts than there are assets. You may have been in line to inherit money from your parents’ bank account, for instance, but some of these debts may have to be paid first, potentially exhausting those funds.
Working through the probate process
Handling your parents’ estate after they have passed away can be difficult. Being an estate administrator could be complicated and it may be the first time you’ve ever done it. Take the time to look at all of your legal options.