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  1. #1
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    Default What happens when someone dies with a debt?

    Whether it be a personal loan, aged care debt, whichever.

    This person has a will and the two recepients are his sons, for whatever remains to be split equally.

    Are debts passed down to children, or is it cleared upon death?

    The reason I ask is because my FIL is in Aged Care and in debt, my DP and his half brother with aspergers are the only two people in the will. He's currently behind on some of his Aged Care fees and they are sending it to a debt collector if he does not pay, regardless of still being there. My DP and I are his power of attorney, financial and medical. They're calling it OUR account on behalf of him. I'm confused.

    When he passes, will it be divided by my fiance and his brother?

    Cheers for any advice

    EDIT: Sorry, if a mod sees this can you please move it to "general chat", i was in the wrong section, TA

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    My understanding is that assets will be sold to cover any debts, and what ever money is left over from the assets sold will be handed down, or if the assets dont pay off the debts then the remaining debt is cleared.
    I don't think debt can be inherited here in Australia.

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    Thanks for that Meg.

    I wasn't sure if it was or not, and considering we're not doing too well financially at the moment + his brother is on centrelink, we're a bit worried that it may be handed down to us.

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    Debts aren't inherited, and also depends if the person had insurance on the loan.. Eg with my personal loan I took out insurance so if I lost my job, was disabled from an accident or died it would be paid out..

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    As far as I know debt isn't inherited. The only way it can be inherited is if one of the debts (personal loan, credit card or whatever) is in joint names. When a person dies, the other person inherits all responsibility for the loan or card.

    Interesting food for thought though is that if the Greens bring up the balance of power, they want to pass death taxes which could be about 55c /$ which is taken out of assets when someone dies. One more reason I'd never vote Green - they're not all about protecting the vulnerable.
    Last edited by Mod-pegasus; 10-09-2011 at 23:22.

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    Just thinking out loud, are they making it "your debt" because he's still alive and you are his power of attorney? What I mean is, I always thought that that meant it was your job to make sure his financial (and other) affairs are managed while he's still alive but not able to do it himself. If so, are you supposed to start selling off his assets NOW to cover his expenses?

    Just a thought.

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    I agree as you have power of attorney for financial matters it is your responsibility to ensure all his fees are paid, he is obviously not in a position to manage this himself.

    If he is a pensioner you can arrange this to be paid directly to the nursing home each fortnight the pension should cover the fees and leave some left over, not much, but still have some left over, this would be used to cover medicine etc?


 

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