Am I Responsible for My Deceased Parent’s Debt?

In short, NO you are not responsible for your deceased parent’s debts, but in most cases their debts must be paid using their assets before you can inherit them.  In Nevada, a child of a deceased parent is not legally responsible for their parent’s debts that are owed to creditors.  However, any assets that are still in the parent’s name (called their “estate” or “probate estate”) will generally need to go through the court probate process.  During that court probate process, your deceased parent’s creditors are notified of the case and those creditors can file claims in the probate court case.  The court will order that those claims be paid out of the assets before the court awards those assets to you, or other beneficiaries. 

If the deceased parent has put their assets into a living trust, that does not change the above answer, it changes the process that the creditor would go through to be paid.  If the parent left assets in a living trust, then the creditors can file a claim for payment with the successor trustee appointed in the trust document as allowed under NRS §164.025.  Those claims for payment would need to be paid prior to the assets in the trust being distributed to you and/or other beneficiaries.

A few exceptions to the above answers are:

• If you inherit a home that has a mortgage, that mortgage remains attached to the home and you will need to make arrangements with the mortgage holder.  You may qualify to “assume” the mortgage, or refinance the mortgage into a loan in your name, or could sell the home and that mortgage gets paid off at the conclusion of the sale of the home.  Some lenders will continue to accept monthly mortgage payments from you for a while, but eventually they can and often will stop doing so and you will have to deal with this issue when they stop accepting payments from you.
• If you co-signed for the debt, then you are still responsible for the debt.  An example of that is if you co-signed for a business loan for a business owned jointly with the deceased parent, or co-signed for a car loan for a vehicle you and your parent were sharing.  A co-signer is the same as a co-borrower or joint borrower, and the co-signer/co-borrower is fully responsible for the complete debt even after the other co-signer/co-borrower has passed away.
• If you were a joint account holder for a credit card (not simply an “authorized signer”), then you are still responsible for the debt. 

There are some options available that can be used to eliminate the ability of personal creditors of yours from filing claims with your trust for payment after your death, and protect your personal assets from your personal debts/creditors even while you are alive.  Nevada law provides for a type of trust that can shield your assets from your personal creditors while you are alive and after you pass away, so that you can pass down ALL of your assets to your children or family, instead of only what is left after paying personal creditors. 

If your loved one, including your parents or other family member has passed away, please contact us to discuss the options for probate of their estate.  If you wish to avoid probate of your estate after you pass away, and to protect your personal assets from your personal debts, please contact us to discuss options for creating this type of trust here in Nevada used specifically for this purpose at 702-515-1500.