<prompt> Human: One of my parents was recently diagnosed a terminal illness and has lost the capacity to make decisions both in action and mental capacity. We are trying to organize finances, but we are concerned about the amount of debt and the debt:assets ratio.Assets: Accumulation of Sick Pay and Vacation time that may be cashed out Retirement Account Economy car that still has payments being made on itLiabilities: Student Loans Credit Card Debt Car PaymentMy concern is that perhaps her liabilities are very close, or higher than her Assets. When she passes away, will her retirement account be used to pay off her debts? What is the best thing to do regarding her debts?Edit: Thank you for your posts. Here is some additional info: Divorced for 20 years There is no will Car is only in her name Credit Cards Student Loans are only in her name  <response>: The retirement account should have beneficiaries listed. If so, it will not be part of the estate, and should pass directly to the beneficiaries.When this happens do check that beneficiaries are listed, the beneficiaries will have 3 choices:1. Take their share of the money as a lump sum, and pay taxes on it.2. Take their share of the money over 5 years in roughly equal installments, and pay taxes but possibly less taxes on it.3. Roll their share into an inherited IRA from which they have to take Required Annual Distributions on which they pay taxes, but the rest of the money continues to grow tax free.If the sum of money is at all substantial, option 3 is best for most people.If the rest of the assets wont cover the debts, the lenders will just be out of luck. They might try to guilt relatives into paying off the debts, but dont. The debts that cannot be covered by the estate, die with the debtor.Good luck. 