You Don't Inherit Debt

Matthew has in-laws who have a large amount of debt. How will that affect his wife and their family if the in-laws die with debt? Dave has good news for him, but a word of caution as well.

QUESTION: Matthew in Ohio has in-laws who have a large amount of debt. How will that affect his wife and their family if the in-laws die with debt? Dave has good news for him, but a word of caution as well.

ANSWER: Zero. It doesn’t affect you at all. You do not inherit debt—period. If you co-signed for one of those loans—if you’re that dumb, don’t do that—you’ll get that loan, right? But if they run up $100,000 in credit cards and they die, credit card companies just don’t get paid. It doesn’t cost you a dime. You’ll get no inheritance from them because anything they own will have to be sold to pay their bills.

If they own a home, I just wouldn’t take the home. I’d hand it to the mortgage company. If they owe $200,000 on a house worth $150,000, toss the keys to them. Don’t take the inheritance. You weren’t relieved of it because you were never obligated for it. It’d be kind of like if you died and left me your house and I didn’t want it because there’s more owed on it than it’s worth. I’m not obligated. Same exact thing. The fact that it’s family doesn’t make it just jump over on to your plate.