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Who will be liable for the debt after my parents die?

Published: December 18, 2019   
Dave Ramsey

Dear Dave,
My parents are getting up there in years, and they aren’t really prepared for when they pass away. They can’t afford life insurance at this point, and they also have a lot of debt. When they die, who will be liable for their debt?
Tammi

Dear Tammi,
Any outstanding debt your parents have upon passing will likely go against their estate. If they have a positive net worth -- meaning they owned more than they owed -- there will be money left over after the debts are paid, and this could go toward an inheritance. If they have a negative net worth, which means they owed more than they owned, everything could be sold off to cover as much of the debt as possible. Regardless, you would only be held liable for any of their debt if you were a co-signer on the loans.

I’d also suggest getting their permission to buy burial policies on them. If they won’t agree to this, you might have to save up money for their final expenses yourself. In most areas, $10,000 to $15,000 is enough to cover basic burial costs for two people.
— Dave

Dave Ramsey has authored seven best-selling books, including “The Total Money Makeover.” The Dave Ramsey Show is heard by more than 16 million listeners each week on 600 radio stations and multiple digital platforms.


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