I remember a moment when I was about 12 or 13 and my mom and I were coming home from a family member's wake. We started talking about our final wishes.
It was pretty light-hearted – I said I wanted a full college marching band to play Oasis's “Stop Crying Your Heart Out” at my funeral while my coffin was lowered slowly into the field where my beloved Chicago Fire soccer team played. Everyone would be dressed in purple and there would be puppies to comfort guests on their way out.
That’s when my mom turned to me and said, “When I die, you and your sister and brother won’t have much money to work with. So I want you to cremate me and spread my ashes along a beach, together.”
I didn't really understand her then. I just thought she loved the beach and hated people making a fuss over her.
But as I grew up and my mom eventually became permanently disabled and had to declare bankruptcy, I started to realize her own fears of not having enough money for her funeral or – as she warned later – for her debts and bills.
A Real Look at the Situation
A couple of years ago, in the fall, my grandmother passed away suddenly. She wasn’t just a grandmother – she was the foundation of my family. She helped raise me and my siblings, and we saw her almost every day for most of our lives.
When she passed, we were devastated. But not only that, we were unsure how to proceed.
There wasn’t much in her estate (her property, her life insurance policies, her savings and retirement accounts…), but we were still lucky. She had virtually no debt aside from the hospital bill from her last stay. If she had more than her estate’s worth, those bills would have eaten up what was left of her money and retirement savings. That said, some debt – such as student loans – may be written off if she had an understanding with her creditor to dissolve debts upon death.
If my aunts or dad had co-signed a loan or opened a joint bank account with her, they'd have had to take over the debt. But we were lucky – that didn’t happen for us. She was a pretty independent woman. What was left of her estate was divided up among creditors without us having to think about it.
What really hurt our family was the funeral expenses. Funerals like my grandmother’s traditional one – with a full wake, burial, coffin, cemetery plot, etc. – cost an average of $7,000 to $10,000. There are “cheaper” ways of doing it, like my mom’s idea of being cremated without a burial plot or ceremony. But whatever your final wishes, that's an expense you should probably plan for.
Thinking Ahead is Hard, But Important
It is so important to remember that your parents’ debts are not your debts. But if you're worried – like I was – make sure that you know exactly what will happen if they should die. For instance, have your parents make a checklist that includes the following information:
- Location of important documents, such as birth certificates, insurance paperwork, loan notes, and safety deposit boxes.
- Name and contact info of the executor of their will (the person who's in charge when they die) and any other important individuals.
- Their funeral and end-of-life wishes.
- A checklist of what to do in case of a disaster.
You should also know that you won't be alone in this.
You wouldn’t be suddenly forced to grow up or deal with the death of a parent alone. More than likely, a community will form around you and walk you through this process.
While it's great to think ahead about things like a parent's debt becoming your own, make sure that you're focusing on helping your parents set up their future first and foremost. Talk to them about budgeting and goal-setting. Talk to them about their debts and their plans to pay them off. Ask them what they would have done to avoid debt had they been your age. The subject of debt doesn’t have to be a dirty secret for parents to hide from their kids. In fact, it can be a valuable lesson and a helpful thing to know about should the unthinkable happen.