Are my siblings andI responsible for debts our father incurred whille he was alive?

There may be a life insurance policy with me as the beneficiary. Do those funds have to go to pay off his debt? He has a mortgage, and we plan on letting the house go back to the bank; there is no mortgage insurance. He had about $15,000 in credit card debt, can they come after any life insurance policy or other accounts? I already closed his checking account where i was named beneficiary ($5000). There was no Will done.

Asked on November 28, 2011 under Estate Planning, Nevada

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Children do not inherit their parent's debt. In other words, a child bears no legal responsibility for a deceased parent's finances. However, their deceased parent's estate does bear such a responsibility. Consequently, to the extent there are assets in the estate, creditors will need to be paid before any distribution is made to the heirs. If there are not enough assets to cover all outstanding debts, then the creditors will right them off and estate liability will extinguish.

That having been said, some assets pass outside of the probate estate. One such asset are the proceeds from a life insurance policy. These funds are out of the reach of creditors. However, beneficiaries of bank accounts (POD accounts) may be subject to the claims of creditors if the deceased didn't leave enough other assets to pay them. 


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