This is a common question when family members are having money problems. If they are related to you, are you possibly responsible? In some cases the answer will be yes, in others no. Let’s discuss some of the most common.
Children: If a child is your dependent, and under the age of 18, then you are responsible for most everything he or she does. While most credit laws prevent minors from borrowing, if a parent co-signs on a loan or credit card… they are responsible for any debts his or her dependent incurs. Once a child turns 18 though, the responsible will shift… except for co-signed loans. Those will always be your deal too.
Parents: Unless you co-sign with your parents on a loan, you are never legally responsible for their debts. Certainly emotionally your may feel torn to help them, but legally you don’t have to. The only other implication to you if your parents mismanage their money is your potential inheritance could be impacted.
Spouse: This is a big one. Yes, you are responsible for all the good and bad of your spouse’s credit and debt. Even if your name is not on the loan, you are equally responsible. This is particularly important if you are separated. It is in your best interest to get all your finances figured out before a divorce… otherwise you might gain most of your spouse’s problems.
Siblings: Unless a sibling is your dependent through adoption, or you have co-signed a loan, you are never responsible for his or her debt.
Extended Family: Just like siblings and parents, extended family members are not tied to you legally simply because they are relatives. The only legally financial tie is one you sign with a contract.
The important lesson is the only people you are legally connected to you are your spouse and your dependents. Unless you enter into an additional contract with someone, you have no legal obligation to help him or her with money.
Related Articles:
*Working on Your Finances with Your Spouse
*Helping Relatives with Their Finances