The Livens Law Firm

How to handle a parent's insolvent estate

Studies show that debt among senior Americans is higher than ever before. Over one half of seniors will die with less than $10,000 in assets, according to the National Bureau of Economics. In Texas and other states, a higher percentage of seniors retire with a mortgage and credit card debt. When a family member passes away, is the estate responsible for any outstanding debt that may be left behind? 

When people die, their debts do not die with them. The debts become part of that person's estate, and some estates are insolvent and have no money to pay creditors. Survivors who are not spouses are not required or responsible for any debt left behind unless they have co-signed a note or have joint accounts with the deceased.

Any assets passed down to loved ones do not have to be used for the estate's debts. Life insurance policies and pay-on-death accounts are exempt from estate debts if they name a beneficiary. One thing to keep in mind is that there are serious tax and legal consequences by adding a child's name or transferring property to avoid creditors or probate.

When someone dies owing money, debt collectors can be relentless trying to coerce money from surviving family members. Some may even say the family has a moral obligation to pay the person's debts. In Texas, those who are confused or have questions about a family's responsibility for paying the debts of a loved one's estate may consider speaking with an attorney. A lawyer with in-depth knowledge of estate administration can provide peace of mind to all involved.

Source:, "When your parents die broke", LIZ WESTON, March 5, 2018

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