Do You Inherit Your Parents Medical Debt?
As we age, the probability of falling ill increases. Medical expenses are only rising, and as a result, more and more people are facing challenges in paying off their medical debt. According to a survey in 2019 conducted by the Kaiser Family Foundation (KFF), over a quarter of adults in the United States skipped some medical treatment or/and prescription because of their costs. In addition to that, it is not unknown that many seniors in their old age may require long-term care, which can be quite expensive.
One question, however, remains unanswered, and that is whether or not you inherit your parents’ medical debt after they pass on. It is essential to look into this matter as it might allow you to make more informed choices regarding your financial situation and even leave familial tensions or disagreements that may arise if the issue is left unaddressed.
This article will discuss in detail whether or not you inherit your parent’s medical debt.
What Are Medical Debts?
Medical debts arise when you incur healthcare costs and are unable to pay them before the due date. When this happens, the medical service provider may report this debt to a collection agency who will then try to collect the debt on behalf of the service provider. The collection agency may report unpaid debts to credit agencies, and the debt may negatively impact the debtor’s credit score.
Do You Inherit Medical Debts?
In general, you are not responsible for any of your parent’s medical debts. As a rule, when someone passes on, their debts are paid from their estate, which is typically the property and debts that the deceased leaves behind. If an estate does not have enough value to pay off all the outstanding debts, then the creditors may attempt to recover a portion of the balance from the heirs or beneficiaries of the estate.
While the general rule says that heirs and beneficiaries are not responsible for their parents’ medical debts, there may be some circumstances where the heirs may get caught up and end up being held accountable. For instance, if an heir signed a financial agreement to pay their parents’ medical expenses, they might be responsible for that specific debt. Moreover, if an heir jointly owned assets with their parents, the creditor may be able to claim some of the assets to cover the remaining medical debts.
Jointly owned assets are property items that belong to more than one person. When an asset is jointly owned, the surviving owner typically becomes the sole owner of the property or asset after the death of the other person. A bank account or property owned by the parents and the heir as joint tenants with a right of survivorship (JTWROS) is an example of jointly owned assets. If a deceased parent had medical debts, and the heir inherited the property through JTWROS, the creditor could attempt to collect the debt from the surviving owner.
It is important to note that the laws governing medical debt and inheritance vary by state. Therefore, it is recommended that one consults with a legal expert to learn about the laws in their state.
Can You Be Held Liable for Your Spouse’s Medical Debt?
The rules for spousal medical debt depend on the state in which you live. In a community property state (Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, Wisconsin), any debts incurred during the marriage are typically considered joint obligations, and the surviving spouse is responsible for resolving the debt. In other states, this is not the case, and the surviving spouse is only responsible for the medical debts if they had signed the agreement to pay for it.
Q: What happens to medical debts after death?
A: The debts are paid using the assets the deceased left behind.
Q: Can I inherit my parent’s medical debt after they die?
A: As a rule, you will not inherit your parent’s medical debts. However, there may be some rare circumstances that might cause liabilities to transfer over to the heir.
Q: Will I be held liable for my spouse’s debts after their death?
A: It depends on the state that you live in. In certain states, such as community property states, debts incurred during the marriage are typically considered joint obligations.
Although it is unlikely for you to inherit your parent’s medical debts in general, exceptional circumstances may cause you to be held liable for the debt. It is critical to be well-informed about the laws and regulations governing medical debts and inheritance in the state, you reside in. In case of a significant medical expense, it is always best to try to negotiate a payment plan or reduce the charges early on to avoid incurring debt.
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While it is unlikely for someone to inherit their parents’ medical debts, there are exceptional circumstances where heirs can be held responsible for debts. The rule is that when someone passes on, their debts are paid from their estate, and if there isn’t enough value to pay off all debts, creditors may recover a portion of the balance from heirs or beneficiaries of the estate. However, if an heir signs a financial agreement to pay their parents’ medical expenses or jointly owns assets with their parents, creditors may attempt to claim part of the assets to cover remaining medical debts. Jointly owned assets are properties owned by more than one person, and the surviving owner typically becomes the sole owner of the asset after the death of the other person. It is recommended that people consult legal experts to learn about the laws in their state, as these laws vary.