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Q: Inheritance of Debt in Canada/U.S.? ( Answered 5 out of 5 stars,   0 Comments )
Question  
Subject: Inheritance of Debt in Canada/U.S.?
Category: Business and Money > Finance
Asked by: mindway-ga
List Price: $5.00
Posted: 26 Oct 2002 13:11 PDT
Expires: 25 Nov 2002 12:11 PST
Question ID: 90262
Let's say you're from Canada but you live in the United States now. 
You have a parent in Canada (widowed/widower) who has racked up
massive debts.  If that parent dies, can the responsibility of paying
those debts transfer to you?  Does it matter if you live in another
country (U.S.)?  What if you live in the same country (Canada)?

What are the general rules for inheritance of debt?  Does it happen? 
How does it work?

If it does happen, what are some ways to protect yourself from it?

Thanks for any help!

Request for Question Clarification by juggler-ga on 26 Oct 2002 14:28 PDT
Do you anticipate that, at his death, the parent will be insolvent
(i.e., lacking assets sufficient to cover the debts)?

Or is it a situation where that parent, despite his massive debts,
actually has substantial assets (real estate, etc.) that could be used
to satisfy the debts?

Clarification of Question by mindway-ga on 26 Oct 2002 16:44 PDT
Good question.  I should have been more clear.

The parent would be insolvent--there would not be sufficient assets in
the estate to cover the debts.
Answer  
Subject: Re: Inheritance of Debt in Canada/U.S.?
Answered By: juggler-ga on 26 Oct 2002 17:22 PDT
Rated:5 out of 5 stars
 
Hello.

There's no "inheritance of debt" in either Canada or the United
States. A deceased person's debts are chargeable against his estate
(i.e., the assets that he owns at death). The creditors of the
deceased person can make a claim against the assets of the estate, but
if the assets of the estate are insufficient to pay those debts, then
the creditors can't try to collect the debt from the decedent's
children.

As financial advice columnist Gary Foreman explains:
"Can someone die and 'leave' their debts to you? The answer is no.
Parents can't leave their debts to you."
For more information, see the complete article at Stretcher.com:
http://www.stretcher.com/stories/01/011029d.cfm

Note that Foreman points out that it would be a different situation if
the children had contractually agreed to pay the parent's debts (i.e.,
by co-signing on a loan or taking out a joint credit card).


Also see this Q & A from legal advice site Nolo.com:

" QUESTION: My mother died. Who is responsible for her credit card
bills and so forth? When I notify them of her death, will that make me
responsible?

ANSWER: Your mother's debts should be paid with the property in her
estate -- that is, the property she left at her death. You have not
inherited these debts.
However, if you inherit property that is collateral for a debt -- for
example, a car that is not paid for or a house with a mortgage -- the
debt comes with the property."
http://www.nolo.com/lawcenter/auntie/questions.cfm/objectID/0DCF5EBD-4FC7-488B-A7841D21F9256065/catID/C0A090EC-1E01-4B51-8FB8D7727BF91358

search strategy: "inherited debts"

I hope this helps.

Clarification of Answer by juggler-ga on 26 Oct 2002 21:35 PDT
Thank you for the tip.
-juggler
mindway-ga rated this answer:5 out of 5 stars and gave an additional tip of: $2.00
Thanks!  That's what I wanted to know!

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