What Happens to Your Parent’s Debt When They Die?

The death of a parent is a difficult time for anyone, and dealing with their finances can add additional stress and confusion. If your parent had outstanding debts at the time of their death, you might be wondering what happens to those debts under Washington law. As such, you should speak to a trusted Washington estate planning attorney for guidance on your rights and obligations.

What Happens to Your Parent’s Debt When They Die?

When someone dies, their debts do not simply disappear. With the exception of jointly owned or titled property, their loved ones do not inherit a deceased person’s debts either. Instead, those debts become part of their estate, and the estate is responsible for paying them off. If your parent had a will, their debts will typically be paid off from their estate before any assets are distributed to heirs. If they did not have a will, the estate will be distributed according to Washington’s intestacy laws, and any outstanding debts will be paid off in accordance with those laws.

It is important to note that not all debts are treated the same under Washington law. Some debts, such as mortgages and car loans, may be secured by specific assets. In these cases, the lender may have the right to repossess the asset if the loan is not paid off. If the value of the asset exceeds the amount owed on the loan, the excess value will be distributed to the estate. If the value of the asset is less than the amount owed on the loan, the estate may be responsible for paying the remaining balance.

Other debts, such as credit card debt and medical bills, are unsecured and not tied to any specific asset. In these cases, the debt will be paid off from the estate’s assets, if there are any. If the estate does not have enough assets to pay off all outstanding debts, the debts may be written off. However, it is important to note that the estate’s executor or personal representative is responsible for ensuring that all debts are properly accounted for and paid off to the extent possible.

It is also worth noting that in Washington state, some assets may be exempt from creditors’ claims. For example, retirement accounts and life insurance policies with designated beneficiaries are typically exempt from creditors’ claims. However, if the estate is the designated beneficiary of these types of assets, the proceeds may be used to pay off outstanding debts.

Talk to an Experienced Washington Estate Planning Attorney

If you are the executor or personal representative of your parent’s estate, it is important to consult with an experienced Washington estate planning attorney to ensure that you are fulfilling your legal duties. An attorney can help you navigate the complexities of Washington law and ensure that all debts are properly accounted for and paid off to the extent possible. They can also provide guidance on how to distribute any remaining assets in accordance with your parent’s wishes or the intestacy laws. Call Gregorek & Associates at 425-284-3450 or fill out our contact form and we will be in touch to schedule a meeting.