My parents are nowhere even close to paying off their mortgage and have tons of debt, including credit cards. When they pass away, will the payouts from their life policy be eaten up by banks seeking repayment for their debts? Will I become responsible for their debts?

 

  • davidosterberg1 6:32 pm on September 5, 2010

    You aren’t responsible for your parent’s debts. If you are the life insurance beneficiary, then you get the proceeds.

    Your parent’s estate will be responsible for all debt. The lenders can attach liens against real and personal property to satisfy the debts. If one parent pre-deceases the other, which is most likely, the remaining parent will be hounded by creditors.

  • Conor C 6:32 pm on September 5, 2010

    life insurance goes to the beneficiary. and is not counted as part of the estate.

    all debts are settled against the estate. if there is no money in the estate, the banks/creditor has to eat it.

    you may get threats to be sued, but I wouldn’t pony up any cash.

  • Caveat Emptor 6:32 pm on September 5, 2010

    Life insurance benefits are paid directly and only to the named beneficiary(ies). They are not part of the estate unless the estate itself IS the beneficiary.

    Your parents’ estates are responsible for their debts after they pass. You are not unless you are a coborrower/cosigner for those debts.