Caring Currents

Your Parents' Debts and Bills - Should You Worry?

Joe showing off our display at MomFest '08
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Well, no matter what your answer to this question, you're going to worry. That's the nature of being an adult child of aging parents. We worry; that's what we do. But when it comes to discharging your parents' debts and financial obligations, for once the law's on your side. So, good news -- there isn't as much to worry about as you might think. A lot of folks (including me until a few months ago) are operating and fretting under some misconceptions about the bills and debts of family members and what happens when they can't be paid.

Here, 5 Little-Known Facts About Debt to Set Your Mind at Rest

  1. You're Not Responsible for Your Parents' Debts
    The only way you can be held responsible for debts your parents racked up is if your name is on the account in question as a joint account holder, says's attorney and expert Barbara Kate Repa. Otherwise you're not responsible -- even if you're an authorized user of the account! One thing to be careful of: You can be held responsible if you illegally co-mingled money from their accounts and yours, so be careful not to do that. Keep your parents money separate from yours, don't co-sign any accounts, and you're free of responsibility.

  2. You're Not Responsible for Your Parents' Medical Bills After Death
    Sadly, it's not uncommon for a parent to die leaving unpaid medical bills. The last stages of care for many illnesses are quite expensive, and bills mount. Your parents, however, are responsible for paying those bills, which are considered a final debt of the estate. They must be paid out of a parent's probate assets before the estate can be distributed to beneficiaries. Assets that aren't considered part of the estate, such as life insurance policy payouts, don't count, so if you're a beneficiary of a life insurance policy, you're not required to pay medical debts out of this amount.

  3. You're Not Liable for Your Parents' Debts After Death
    Lots of people worry that if a parent passes away with debt, that debt will become their responsibility. Not so says's Joe Matthews. Even if you signed checks for a parent, as long as you were using the parent's money to pay the bills, you aren't personally responsible. However, there's one big exception -- if your parent leaves behind an "estate," such as bank accounts, a house, or other assets, then parties to whom the parent owed money have a right to expect payment from the estate before it's paid out to whoever's inheriting the estate.

  4. Having Power of Attorney (POA) Does Not Make You Liable for Debts
    All having durable power of attorney does is name you the agent for that person -- in other words, you're legally entitled to act on your parent's behalf. However, the funds this applies to are those of your parent, not your own.

  5. Your Credit Score Only Reflects Your Finances -- Nobody Else's
    Credit score concerns are a big worry these days, with so many people facing foreclosure and other losses. But rest assured that any financial hot water your family members get into shouldn't reflect on you. (The only exception to this is if you co-sign a loan; in that case, if the borrower defaults, you're next in line. But that's a separate problem.)

There's sometimes confusion about this issue because it does work the other way: young people just starting out can build a credit history by being listed on a parent's credit card account. But have no fear, that doesn't mean the creditor can come after you. Your credit score is compiled for you as an individual using data such as your name, social security number, and address. If you get a copy of your credit report and there are transactions listed that weren't yours, call up the credit reporting agency and file a dispute.