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I thought that's what happened? Or is debt not part of the inheritance in this case and only the savings/property given to the family?

by y4mi 8y ago

tankenmate 8y ago
In the UK debt can not be inherited. A debt that is shared (severally or collectively) with a dead person is different. The main reason for this is that under common law you can't be held liable for other people's actions or inaction (unless you specifically agree to it; i.e. being guarantor for someone else's debt). Any assets left after debt has been settled by the estate can be inherited. If the estate has more debt than assets then the estate is effectively bankrupted but it would normally be handled by the Probate Court (the court that handles cases of death estates amongst other things) rather than the Court of Chancery (Bankruptcy court). In days of yore both the Probate Court and the Court of Chancery were a part of the Court of Equity (in effect a court of common law) and so the Probate Court had very similar powers to the Court of Chancery and hence the Probate Court would handle a bankrupted estate rather than turning it over to the Court of Chancery. EDIT: added explanatory clause
- detaro 8y ago
  But that's pretty much what the parent asks about in this context: the existing debt is part of the estate, and relevant to the heirs. I think you misunderstood the intent of their question by focusing on the "inherited" too much.
  - manicdee 8y ago
    The debt is not relevant to the heirs. Any debt that can’t be settled by the estate is facing a bankrupt debtor. What matters to the heirs of the estate is whether there is an inheritance or not. That happens after debts are settled and contracts terminated. It is relevant to the executor of the estate, who may not be an heir (and in many jurisdictions, is prohibited from being an heir).
msbarnett 8y ago
> Or is debt not part of the inheritance in this case and only the savings/property given to the family? Inheriting debt is virtually unheard of in most of the western world. The estate will pay off what it can, but the rest of the debt is simply wiped out. The exceptions here are mortgages, which are attached to the house and therefore would transfer to whoever inherits the house, if they accept it. And in the US some states have some kind of exception which transfers medical debt to children in some circumstances, apparently, which strikes me as barbaric.
- y4mi 8y ago
  i guess germany isn't part of the western world in that case? you've got a choice if you've got an inheritance. You either inherit everything that you're eligible to inherit (this includes any outstanding debts) or nothing. At least that's my understanding of my local law, but I'm neither a lawyer nor did i ever inherit anything.
  - chrisseaton 8y ago
    > you've got a choice if you've got an inheritance. You either inherit everything that you're eligible to inherit (this includes any outstanding debts) or nothing. But that's effectively the same situation as in almost any other country. Debts are settled before you are eligible to inherit anything. If debts are more than the estate has, then you don't inherit anything.
    - y4mi 8y ago
      Oh, it's very different. Either the court figues out if there is any inheritance and distributes everything left over after settling any debts... Or the inheritor has to figure everything out himself, potentially indebting himself because he didn't know about a debt. Accepting an inheritance is pretty risky in Germany, if your parents weren't well off. And PayPal's letter would make sense if its left for the inheritor to figure out. But that doesn't seem to be the case if I understood the sibling comment correctly? It's always interesting to learn stuff like that :)

I thought that's what happened? Or is debt not part of the inheritance in this case and only the savings/property given to the family?

by y4mi 8y ago

I thought that's what happened? Or is debt not part of the inheritance in this case and only the savings/property given to the family?

tankenmate 8y ago

In the UK debt can not be inherited. A debt that is shared (severally or collectively) with a dead person is different. The main reason for this is that under common law you can't be held liable for other people's actions or inaction (unless you specifically agree to it; i.e. being guarantor for someone else's debt). Any assets left after debt has been settled by the estate can be inherited. If the estate has more debt than assets then the estate is effectively bankrupted but it would normally be handled by the Probate Court (the court that handles cases of death estates amongst other things) rather than the Court of Chancery (Bankruptcy court). In days of yore both the Probate Court and the Court of Chancery were a part of the Court of Equity (in effect a court of common law) and so the Probate Court had very similar powers to the Court of Chancery and hence the Probate Court would handle a bankrupted estate rather than turning it over to the Court of Chancery. EDIT: added explanatory clause

detaro 8y ago
But that's pretty much what the parent asks about in this context: the existing debt is part of the estate, and relevant to the heirs. I think you misunderstood the intent of their question by focusing on the "inherited" too much.
- manicdee 8y ago
  The debt is not relevant to the heirs. Any debt that can’t be settled by the estate is facing a bankrupt debtor. What matters to the heirs of the estate is whether there is an inheritance or not. That happens after debts are settled and contracts terminated. It is relevant to the executor of the estate, who may not be an heir (and in many jurisdictions, is prohibited from being an heir).

msbarnett 8y ago

> Or is debt not part of the inheritance in this case and only the savings/property given to the family? Inheriting debt is virtually unheard of in most of the western world. The estate will pay off what it can, but the rest of the debt is simply wiped out. The exceptions here are mortgages, which are attached to the house and therefore would transfer to whoever inherits the house, if they accept it. And in the US some states have some kind of exception which transfers medical debt to children in some circumstances, apparently, which strikes me as barbaric.

y4mi 8y ago
i guess germany isn't part of the western world in that case? you've got a choice if you've got an inheritance. You either inherit everything that you're eligible to inherit (this includes any outstanding debts) or nothing. At least that's my understanding of my local law, but I'm neither a lawyer nor did i ever inherit anything.
- chrisseaton 8y ago
  > you've got a choice if you've got an inheritance. You either inherit everything that you're eligible to inherit (this includes any outstanding debts) or nothing. But that's effectively the same situation as in almost any other country. Debts are settled before you are eligible to inherit anything. If debts are more than the estate has, then you don't inherit anything.
  - y4mi 8y ago
    Oh, it's very different. Either the court figues out if there is any inheritance and distributes everything left over after settling any debts... Or the inheritor has to figure everything out himself, potentially indebting himself because he didn't know about a debt. Accepting an inheritance is pretty risky in Germany, if your parents weren't well off. And PayPal's letter would make sense if its left for the inheritor to figure out. But that doesn't seem to be the case if I understood the sibling comment correctly? It's always interesting to learn stuff like that :)